* Diverse products Diverse products and revenue should help shield the business from shocks in any one part of their business. Different products have different characteristics. Those characteristics do not always match; therefore, a company can lower their risk by investing in a business with low correlations with other products. This lowers risk and increases the value of the business over the long-term. WEAKNESS: * Company size "Company Size" will have a long-term negative impact on this entity, which subtracts from the entity's value.
Which method would lead to the best decision when a competitor is submitting a lower bid for your product? The absorption cost method will show the profitability and will provide the best references concerning how much money the company will make as compared to the bidder who has the lowest bid. Absorption costing will be more useful to companies that do not sell all of its products manufactured during a certain period. By using absorption costing the cost of the product, is not going to be shown until the time that
A more difficult and time consuming effort Huffman could take to reduce exchange rate risk is to spin the rate to your advantage (Prinzel, 2013). This means when USD exchange rates are high, Huffman would need to ensure their customers are aware of the benefits they could be receiving in discounts. Relative to Huffman Trucking’s benefit with this approach, they could buy foreign exchanges when rates are low, similarly taking advantage of the same benefits their customers would
This will lead to lower prices as average costs went down. (econ of scale diagram) Economies of scale can occur to different reasons. For example technical, which is if one firm has low fixed costs, then mergers will have low average costs, which is good. Also they might have better interest rates when merged together. A vertical merger would normally benefit less from economies of scale, as it will not receive an advantage from technical economies of scale.
New contribution margin = $70 Break-even point in passengers = fixed costs/contribution margin Passengers = 45,000 Train cars = 715 e) Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? Before Tax Needed Profit = $1,071,428.57 Before Tax Needed Contribution Margin = $4,671,428.57 Contribution Margin per Customer = $120 Number of Customers Needed = 38,928.57 Whole Number of Customers Needed = 38,929
The higher the ratio the more assurance exists that the retirement of current liabilities can be made. The current ratio measures the margin of safety available to cover any possible shrinkage in the value of current assets. Normally a ratio of 2 to 1 (2.0) or better is considered good. Short-term creditors prefer a high current ratio since it reduces their risk. Shareholders may prefer a lower current ratio so that more of the firm's assets are working to grow the business.
c) C. A nonunion work force allows a corporation more freedom of movement. A unionized work force has restrictions, allows workers to strike and create work stoppages, higher wages may be paid to workers which would affect corporate profitability. d) D. Inflation deteriorates the value of money, the company can afford to buy less materials/workforce with the same amount of capital as before. e) E. A technological breakthrough would reduce cost of production creating competitive advantage and long term
In 2007, they reduced their current installments of long-term debt by 0.76%, accounts payable by 1.61%, and other current liabilities by 1.35% in just a year as portion of their Liabilities and Shareholders’ Equity. They however faced an increase of accrued payroll
However, there is a problem that Costco has to deal with is that their profits mostly from its membership fees instead its net income. They are sometimes keeping the prices too low to compete with their competitor but this strategy has a disadvantage. They couldn’t make a lot of profit from the merchandises. Therefore, a recommendation needs to be given. They should utilize their space in each store efficiently.
In addition, there will be the opportunity cost of not having cash available for more useful requirements i.e. supplier discounts, interest income. Therefore, Willow Company needs to hold optimum levels of inventory and increase its sales in order to improve its inventory turnover and cash