Corporate Finance Ch 1 Solutions

a good employer. Hence the employee retention rate is very low. The purpose of this report is to propose a

Why is stock value maximization superior to profit maximization as a goal for management?

Stock value maximization is pretty significant to a company since it can be told about the company such as an reputation. Companies cannot exist by themselves. They do need a lot of money or

Retention of key employees: the entering into of the Plan, and subsequent contributions made to the

First, Business prices will raise which can affect consumers because now they’re wallets will be affected. On top of that, the population that purchases products from that company will go down which will save the company money. That’s a bad thing because the reason they fired the employees is because they did not have enough money. So they just got rid of employees that they may need now.

Company Y offers a good compensation package inclusive of direct and indirect financial compensation to its employees. However, we are of the view that to retain staff, the following measures could be implemented.

Employers forced to pay workers more will eventually cut a number of them to avoid the loss of profit, and as an effect, hundreds of thousands of hard-working Americans will suffer job loss or reduced benefits. The

Ford Company faced the labor surplus because of its high cost structure and decreased in the demand of automobile. There was no work for all employees in the company but the ford paid salary and other benefit to all employee even there are not contributing and involving in the production. As there was decrease in sales of Ford automobile, they had surplus in their work force. Moreover they were unable to afford to keep all the employing paying their salary. They also had to bear financial loss. Hence they were eager to cut down their entire work force. (htt91)

* Employees might decrease rate of production as demand decreases to create an impression of need and to preserve jobs

In our analysis we will be addressing the issue of fixing production capacity of the company as to determine the labor size that could be fixed before workforce unionization. Labor force and output cannot be varied easily once it occurs. As the company is a price-taker and we do not know what exactly the associated probabilities may be, we must identify the profit maximizing output the company would be producing over the future months.

Conversely, insufficient capacity or inefficient computing resources can stunt growth. The company that waits until it can afford to purchase the right hardware and software may find itself unable to remain competitive. Moreover, although businesses would rather keep their credit lines open for unforeseen events, they must sometimes act quickly to adopt economically attractive new technology. Before we examine the attributes which make leasing attractive to so many companies we need to review two most common types of leasing arrangements.

As the price of the products is comparatively low, that will increase the purchasing power of the customer and they will buy in larger quantity and thus the company gains the profit. (Soni, P. (2016))

In today’s competitive workforce, compensation and benefit packages plays a crucial role on recruitment and retention for both the organization and the employee. Bumpbie finds itself in a situation where it could positively affect its employee’s morale, turnover rate and longevity; by making a strategic decision to implement compensation and benefit packages that will encourage current workers to stay and entice new applicants. Money is not always the inherent reason businesses experience high turnover rate, the constant shifting in the job market will always be a contributing factor as well as employee’s moral. Mayhew, R. (2016), explains that an “employee compensation plan” refers to all the components offered as well as the way in which they are paid, and the reason behind the employees getting the compensation case bonuses, salary increases and incentives. The fact that there are voluntary and mandatory benefits that organization provides to their employees give employees the freedom of choice, as well as the option to make the whether to stay with or leave an organization based on the benefits it provides. Variable Pay is also an option that some employers offer their employee which is performance based or results oriented. Whether it is profit sharing, merit based programs or incentive bonuses; it all comes down to which organization can provide employees with the compensation or benefits packages that best satisfy their needs.

AMG Inc, a Fortune 500 financial services company, is implementing 7,542 new PCs in the time frame of twelve months in multiple locations covering eight states. This is a $7.5 million technology financing decision which needs to be investigated. The current decision that Adam Stolz, controller for the CFO, faces is whether AMG should lease or buy the new PCs. Also, he is under pressure from the CEO to keep the transaction off of the balance sheet, in which case the equipment/software would have to be defined as an operating lease, according to the standards defined in FAS 13. The lease options consist of a 24-month lease or a 36-month lease, and AMG could also choose to purchase the computers for the same

The dividends that stockholders receive and the value of their stock shares depend on the business’s profit performance. Managers’ jobs depend on living up to the business’s profit goals.

This gives the illusion of lower cost of goods sold (and thus higher profits) but it is, in fact, just a temporary capitalizing of the fixed manufacturing costs due to inventory build up.