A firm’s value depends on the positive net income generated in the past. True False A firm’s value depends on the firm’s ability to generate positive cash flows now and in the future True False When determining the value of a firm, which of the following statements is true? • Inversters are risk neutral. Other things equal they prefer to pay more stocks that are less risky and have uncertain cash flows • Investers love risk. Other things equal they prefer to pay more for stocks that are more risky and have uncertain cash flows.
Explain the term ‘globalisation’ and the role that multinational companies play in the development of globalisation. Globalisation is the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange. Globalisation has increased the production of goods and services and has therefore lead to increased trade between countries. This trade encourages countries to work together and removes trade barriers such as quotas and tariffs. This increased openess allows countries to specialise in producing goods which they have a comparitve advantage in (this means they can produce goods at lower unit costs) A multinational Company is a corporation that has its facilities and other assets in at least one country other than its home country.
This will mean the population will have more money which will go into the economy, this will mean more income for improving infrastructure and services. Also as TNCs move to other countries, job opportunities increase which means that the quality of life will generally improve too. Another benefit would be that the status of an area would be raised; this may encourage investment by other big name Multi-Nationals and most importantly will improve the countries economy drastically as valuable export revenues will be earned. Most important, they will benefit from cultural exchange creating a cultural integration. LEDC countries do not benefit as much as MEDC countries do, for example, sometimes much of the employment is low paid, low skill, long hours, meaning that the countries do not develop economically or give the opportunity to develop their skills.
With the value of the dollar raising it will increase real Gross Domestic Product. When the country as a whole is better it will make people feel good about spending money. Once people start spending money, the country will start to resemble what it used to be. In addition exchange rate could be a big factor on the amount of product that you export. This could have a bearing on what the company’s bottom line
On the other hand if the cost is decreasing it would have positive impact on the profit as the profit will increase. Business must make profit in order to create reserves. Reserves are needed for a variety of reasons. These reasons might include the following of: 1: unforeseen economic adverse changes in the future. 2.
This could be because Bristol has already undergone a regeneration process. This would mean that employment was quite good due to new businesses moving into the area, which would in turn lead to more money in the local economy. This is called the multiplier effect, and if a city manages to achieve it then they can be seen as successful. This could also be compared to London, as the levels of household deprivation are very similar. This could be due to the size of the city, as the population in London is huge and therefore the results are varied.
Increased Profit Opportunities Company S will also increase dealership motivation by providing additional profit opportunities. This includes providing the dealerships with marketing and advertising and sales promotions, as well as offering the dealerships credit terms on their product purchases. Through these opportunities, Company S will strengthen its relationship with the dealerships. Again, the disadvantage is through an increased cost to the company by means of advertising dollars and carrying credit terms. 3.
B) It means that economic freedom is limited by the amount of income available to the consumer. C) It means that there is an opportunity cost when resources are used to provide "free" products. D) It indicates that products only have value because people are willing to pay for them. Answer: C 3. Opportunity cost is best defined as: A) marginal cost minus marginal benefit.
Going public Going public through IPO is the process of selling the ownership of firm to public shareholders for the first time (Bodie, Kane & Marcus 2014). IPO might consider being a big deal as it involves both benefits and costs. The most significant advantage of going public is financial reward in terms of raising capital funds for growth as it will offer wider range of finance source via public market. Those funds can be used in company development projects, operation business routines and others obligation liabilities. Another primary benefit of going public is the increase in liquidity for owners, investors, and institution.
One fallacy is that trade is a zero sum activity, if one trading party gains, the other must lost. 2. Imports reduce employment and act as a drag on the economy, while exports promote growth and employment. This fallacy stems from a failure to consider the link between imports and exports. 3.