What is the Decreasing Returns to Scale? Can you please explain and give a definition, thank you.

Q: What is the incremental analysis?

A:

Q: What is one interpretation of a high P/E ratio?

A: Price to earnings ratio (P/E ratio) states the relationship of the earnings with price of that…

Q: What is Ratio Analysis? Briefly explain

A: Ratio Analysis: It is the procedure of analyzing and looking at money related data by determining…

Q: In performing horizontal analysis, why is it important to look at both the amount and the percentage…

A: Definition: Horizontal analysis: The comparison of an item of a financial statement of one year…

Q: What are solvency ratios and what do they measure?

A: Solvency ratios of the company indicates that whether cash flows of the company are sufficient to…

Q: How do we calculate the quick ratio?

A: Quick ratio: Categorized under liquidity ratio  Quick ratio which helps company to know the it's…

Q: Define average return

A: The formula to compute average return as follows:

Q: Illustrate the calculation of the standard deviation of returns?

A: Standard deviation refers to a measure of variation or dispersion of a set of values. We can…

Q: What is meant by partitioning the internal rate of return? Why is this procedure meaningful?

A: Internal rate of return is defined as the annual rate of earnings on an investment and unlike income…

Q: In the Romer model, output increases in the and decreases in the

A: Romer model states that the savings rate would be increased and there would be a decrease in the…

Q: How can the quick ratio be determined with the given information?

A: Quick Ratio: Quick ratio is a liquidity ratio calculated for the purpose of evaluating the liquidity…

Q: How can we calculate the Rate-of-Return with Excel?

A: The question is based on the concept of calculation of rate of return (ROR), (ROR) is percentage…

Q: What caused a decrease in the current ratio?

A: The current ratio is the ratio that is used to calculate the ability of the company to pay off its…

Q: Draw a figure to explain Elements of required return - establishing a MARR?

A: The figure is represented as below: Note: Values assumed

Q: What is the P/D ratio? How can it be improved?

A: P/D ratio is more accurate way for anticipating what is really required. P/D ratio compares the…

Q: What is the difference between arithmetic and geometric mean returns?

A: The difference between arithmetic mean return and geometric mean return is mainly in two aspects…

Q: Is a negative Sharpe ratio good or bad?  EXPLAIN

A: What sharpe ratio measure? It measure the excess return earn by portfolio over risk free rate at…

Q: Explain four aspects of rate-of-return analysis?

A: The return of return is the return on investment made when the time value cashflows turns to net…

Q: What is the difference between YTD and YoY return? Provide an example

A: In the question they have asked regarding YTD and YOY differences between them so they will be…

Q: What formula to use to find Payback Period and NPV? (in Excel)

A: NPV or Net Present Value is the present value of all net cash cashflow on a provided discount rate.…

Q: Describe the Incremental B/C-Ratio Analysis?

A: Benefit cost analysis: Benefit cost analysis refers to analyzing the desirability of project where…

Q: what is quick ratio?

A: Ratio analysis: It refers to the quantitative technique of financial analysis that allows gaining an…

Q: Why is ratio analysis so significant?

A: Ratio Analysis: This refers to the performance measurement of the business, in order to know the…

Q: What is the general goal of trend analysis?

A: Trend analysis:   Trend analysis is prepared to make comparison between the previous year's…

Q: What is ratio analysis?

A: Ratio analysis: The analysis of a company using the financial ratios and comparing its trends and…

Q: How is the Quick Ratio calculated?

A: Definition:   Quick ratio: The financial ratio which evaluates the ability of a company to pay off…

Q: What does the quick ratio measure?

A: Ratio Analysis is a financial tool used to derive conclusions about the company’s health and overall…

Q: Is there a difference between arithmetic and geometric average returns? Is it true that they…

A: Geometric average is generally used by investment professionals to measure the performance of…

Q: What is an opportunity cost? How is this concept used in TVM analysis, and where is itshown on a…

A: The term opportunity cost from the economics view point is defined as the benefits that have been…

Q: What is the geometric-gradient-series present-worth factor?

A: Present worth: It is the present value of future cash flows. The gradient is a change occurring in…

Q: Explain arithmetic mean returns?

A: Arithmetic mean:It is a commonly used measure of  mean (or measure of average). Arithmetic mean is…

Q: Show how to estimate beta using regression analysis

A: Beta can be decided either with linear regression or simple regression. The regression lines slope…

Q: What is opportunity cost? How is this concept used in TVM analysis, and where is it shown on the…

A: Opportunity Cost is the cost of the next best alternative forgone. In other words, it is the return…

Q: Write an alternative way to derive the geometric-gradient-series present-worth?

A: Geometric-gradient-series present worth is derived with the help of the following formula: g is…

Q: Formula for quick ratio?

A: Quick ratio is an important financial ratio used to evaluate the liquidity of the company

Q: What is Modified Internal Rate of Return (MIRR) method?

A: Internal rate of return (IRR): The internal rate of return (IRR) is a measure utilized in capital…

Q: Explain the process of Rate-of-Return Calculation with Excel?

A: Rate of return is the rate expressed in terms of percentage which an investor expects from the…

Q: What is the difference between the current ratio and the quick ratio?

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: Least-squares regression is a statistical method for identifying cost behavior. True or False True…

A: According to the given question, we are required to give the answer that the statement is true or…

Q: Distinguish between Current ratio and Quick ratio?

A: Ratio analysis: It refers to the quantitative technique of financial analysis that allows gaining an…

Q: have led to a drop in the required rate of return?

A: Required Rate of return is the minimum rate of return which an investor expects for investing in a…

Q: Another term for return is ..................

A: Return means money which is earned or lost in the process of investment. Return  can be in the form…

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary. 

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.