The stock market valuation of a firm is influenced by expectations of future sales and profit streams so if a company achieves disappointing growth figures, this can be reflected in a fall in the share price. This opens up the risk of a hostile take-over and also makes it more expensive for a quoted company to raise fresh capital by issuing new shares 2. Cost motive: a. Economies of scale in the long run increase the productive capacity of the business leading to lower average costs. They help to raise profit margins at a given market price 3.
If the rate of inflation increases by a certain percentage, the average price of all goods and services in the economy has risen accordingly. This becomes negative when a person’s income is not linked to inflation rate, and, unlike the price of goods, remains constant. Techinically, this could be seen as an increase in real income. However, if inflation turns out to be higher than expected, even those with inflation-linked incomes may be negatively effected. Living standards are reduced.
Maybe, decreasing in efficiency will play a great probability. On the other hand, if the sales rise, with the increasing net income, the profit margin will have an obvious increase. The efficiency will go up, too. Among the other drives, we can change some of them to alter the value of the firm. Management can decrease the COGS/Sales ratio in order to increase the effect on cash flow, which will attract more purchases of the stock.
Sales grew 33% in 06 and 22% in 07. There is a gap in the growth coming from sales where income is lost due to the increase in raw material prices and forecasted demand which led to an inventory cut. 4. Which is the EBITDA margin? | 05 | 06 | 07 | EBITDA Margin | 8.6% | 15.6% | 9.7% | 5.
Low purchasing power will directly affect the aggregate production, with fewer resources are used, unemployment rate rise, there is less pressure on price, and therefore reducing the inflation rate as the supply is greater than demand. An increase in interest rate will have multiple effects. Firstly it stops firms from expanding, when the purchasing power has reduced, firms sell less and make less profit. Firms will cut the production and size of their workforces to reduce their costs; unemployment rate rise and people are less likely to spend. Secondly, the saving ratio will increase; less money is in the circulation.
Yet in comparative terms Britain was slipping behind the rest of Europe and was well on its way to becoming the sick man of Europe.Britain’s share of world trade fell, causing turmoil in the economy. The rise of wages rose to higher living standards which led to higher imports and less exports. Although exports grew, imports grew faster, creating a balance of payments crisis. This contributed to economic decline. However the decline in exports
Calls increase in value when the underlying security is going up, and they decrease in value when the underlying security declines in price. Puts increase in value when the underlying security is going down and decrease in value when it is going up. There are risks associated with calls and puts. These options are more risky than owning stock because there is a greater chance of losing your investment quickly. The risk increases as these options get closer to their expiration date.
Generally, a booming economy will bring a decrease of unemployment rate as more labour is used to meet extra demand (Sloman, 2008). 2.2.1
If you have challenges in this area, devise a strategy to improve your inventory turnover rate by either increasing goods sold or decreasing your investment. Step 1 Increase demand for the product line by working with your marketing team. Focus advertisements to locations frequented by a majority of your target market. Offer a sales promotion -- such as a buy-one, get-one-half-off special -- to increase the amount of inventory that leaves the warehouse in a given period of time. Step 2 Set a better overall price for the products to increase demand, which in turn boosts sales and inventory turnover.
An integral part in performing a horizontal analysis is the ability to see the variation from one period to the next which are called trends (Horizontal analysis, n.d.). . Within the income statement, net sales increased by 33.3%, $150k, from Year 6 to Year 7. Then, a drastic decrease of 15% which is roughly $900k, took place from Year 7 to Year 8. The 33% increase showed the strength of the company, but the huge drop in sales demonstrated how Competition Bikes, Inc. (CB) struggled to attain a surge in its revenue which is the result of the 15% decline in sales caused by economic situations.