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How can small businesses or corporate manager use financial leverage to improve the firm's profits and
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- If the management of a company would like to improve the company's return on equity, what should the management of the company do?Tutorial Questions Explain to John, your mentor, the primary goal of the organization? Your manager is requesting you to provide an explanation to the question. Would the role of a financial manager be likely to increase or decrease in importance if the rate of inflation increased? What is the difference between stock price maximization and profit maximization? What are the three principal forms of business organization? What are the advantages and disadvantages of each? What mechanisms exist to influence managers to act in shareholders’ best interests? What is an agency relationship? What agency relationships exist within a corporation? What are financial intermediaries, and what economic functions do they perform? How does an efficient capital market help to reduce the prices of goods and services? What is the term structure of interest rates? What is a yield curve? How should users and savers of…Why do you think that wealth maximization is an appropriate goal of the firm? Does it lead to maximization of the wealth of shareholders? Does an attempt by the management to maximize value ofthe firm benefit the society? Explain.
- Business Ethics and Corporate Social Responsibility: Do businesses have a responsibility to society or to their shareholders? Explain your answer. Do these responsibilities conflict or work together? How do social and profit responsibility relate to CSR?What effect does financial leverage have on a company's return on equity and its overall valuation? What guiding principles help managers decide on the amount of debt and equity (i.e. the capital structure) they should fund their activities with? Is there an optimal capital structure the firm should target?Which of the following is NOT a way of stating the overriding goal of financial management? Select one: a. Maximising the value of the firm. b. Maximising the wealth of shareholders. c. Maximing the firm's share price. d. Maximising revenue.
- Financial managers shouldconsider this when.improving thefinancials of the firm A. that the overall goal is the maximization of the market value of the equity through improved income and cashflows.B. that cost minimization is the primary concern of the firm.C. that exposing the firm to the most risk for the most return should be priority.D. that the personal goals of customer and employees are above the goals of the shareholders.The objective of a financial executive is; a. to maximize a firm's profit b. to maximize the price of a firm's common shares c. to avert financial disasters d. to maximize dividendsWhat is significant influence and what factors are considered to determine if you have significant influence in the company in which you invest? Name and explain the main economic advantage of business combinations.
- Do firms need to consider the so-called corporate social responsibilities in making investment decisions?An investor provides an entrepreneurial firm with the capital that it needs to grow. over and above providing the capital, in what other ways can the investor add value to the firm? What are the possible downsides of having a venture capitalist as an investor in the business?What advice would you give those who want to invest in this company? (recommendations) (based on profitability, productivity, leverage, disaggregation analysis)