The definition would describe growth as the process of improving measures of an enterprise’s success. Business growth can be achieved either by boosting the revenue of the business with greater product sales or service income, or by increasing the profitability of the operation by minimising costs. Profitable growth can be achieved in many ways and strategic diversification has definitely played a large role in the growth of many large businesses today. However just like any strategy this all depends on many factors. For example, the type of industry the business is operating in or the risks involved into entering new markets.
Question 3 Question 4 If Heavenly Foods does not have an opportunity to lease the space, it is not free or costless to the lite product project. Instead it is an opportunity cost of $43,750 that must get charged to the new project and failing to do so would cause the new project’s calculated NPV to be too high. Question 5 Yes the erosion of profits should be charged to the High Energy Lite product due to cannibalization, a negative within firm externality where the new business eats into the profits of the existing business. Therefore the new
Leslie Fay Companies 1.) Clearly Inventories was a big item to address along with Accounts Receivable. Sales and gross profit were stellar in a time of industry unease. Furthermore Accounts Payable decreases as a percentage of current liabilities while Inventories increase as a percentage of current assets. This is an implausible trend on the Balance sheet that BDO should have investigated further, especially with Leslie Fay’s outstanding Income Statement.
What is the project’s net present value? When attempting to finance a project, it is important to know the financial health of the company. The net present value aids with analyzing the profitability of a project. It demonstrates the difference between the present value of the cash inflows and the cash outflows (Titman, Keown, & Martin, 2011). When a negative net present value is obtained, it is a sure indicator that the firm should not continue to invest in a project.
Week 6: Individual - Money Train Multimedia Activity Week 6: Individual - Money Train Multimedia Activity XECO 212 March 25, 2012 Scenario 1 In 150 to 200 words, explain your reasoning for the way you are planning on using Reserve Requirements. Be sure to address the following: 1. How Reserve Requirements affect the economy 2. How your action will affect economic growth 3. Why it is important to increase economic growth 4.
If the IRR is less than the WACC, the project should be rejected, as it impoverishes the firm’s owners. If the IRR equals the WACC, it earns only normal profits (i.e., the owners’ opportunity costs) and accepting it is a matter of indifference. In this care the project’s IRR is 18.031 > 11.88%, therefore the IRR rule tells us the same as the NPV rule: this project will enrich the firm’s owners. We note in passing that in more advanced courses in finance you would learn about projects for which this rule cannot be used. Broadly speaking, they are projects whose cash flows changes sign more than once—e.g., from negative to positive to negative again.
For purposes of external financial reporting, LIFO may not be used with the lower of cost or market approach. c. If LIFO is used for external financial reporting, then it cannot be used for tax purposes. d. None of these. 83. If inventory levels are stable or increasing, an argument which is not an advantage of the LIFO method as compared to FIFO is a. income taxes tend to be reduced in periods of rising prices.
While the invisible hand cannot guarantee efficiency, it is better at guaranteeing equity. ANSWER: F TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxx]. The two broad reasons for a government to intervene in the economy are to promote efficiency and to promote equity. ANSWER: T TYPE: T KEY1: D SECTION: 2 OBJECTIVE: 7 RANDOM: Y [cxxi]. Market failure refers to a situation in which the market does not allocate resources efficiently.
What two reasons does Franklin give for the larger families in America? Explain why labor is expensive in the colonies. Extrapolating Franklin’s assessment of the relationship between the colonies and Great Britain, what are the long-term consequences of such population growth on
So, Colbert created the idea of minimizing imports so that France would not throw its riches back into the rest of the world. Mercantilism said to buy the least possible from other countries. Although, tea was one good that the French imported a lot of. So, to compensate somewhat for their import costs, they started taxing foreign items in order to keep as much money in the country as possible. This might have been seen as being selfish to other countries, which is why other nations eventually started taxing goods from France.