Why do most small businesses operate with less leverage than Miller and Modigliani’s model would consider to be optimal? Explain.

Q: Which of the following is not one of the benefits of breakeven analysis to businesses? A.…

A: A break-even analysis is a financial tool

Q: Why would a company want to know their operating leverage when they can already calculate the number…

A: Degree of operating leverage means the division of contribution with operating income. Number of…

Q: Which of the following statements about operating leverage is false?

A: The answer for the multiple choice question and relevant explanation are presented hereunder :

Q: Neptune Corporation wants to decrease its operating leverage. Which of the following results can the…

A: Operating leverage can be referred to as an accounting measure that determines the impact of revenue…

Q: hat way can the use of ROI as a performance measure for investment centers lead to bad decisions?…

A: ROI is the return on investment in which the there is consideration for the current year profit only…

Q: We learned that share value maximization is the ultimate goal of a firm in the market economy.How…

A: Wealth maximization is focused on increasing the company's stock prices and thus increase its market…

Q: Choose the correct. Which of the following does not represent a primary motivation for business…

A: Definition:   Business combination: Business combination refers to the combining of one or more…

Q: If Account Based Costing (ABC) is so great, why do such a small percentage of companies use it? Why…

A: Activity based costing is a type of Costing in which the overhead or the indirect cost are…

Q: Bulldogs Inc. wants to enter the global market. Which one may not be the reason in such decision?…

A: When a company wants to enter into global market in order to expand it business reach, many factors…

Q: rrier to entry that helps increase the threat of new entrants for an incumbent firm using a…

A: In the context of a competition, cost leadership refers to a company's claim to be the cheapest…

Q: What does it mean to use the DuPont model to help explain a decrease in ROI?

A: Introduction: DuPont analysis is done to find out the various drivers that account for the return on…

Q: Which of the following does not represent a primary motivation for business combinations?a.…

A:

Q: What is the concept of operating leverage? Describe a scenario where a high degree of operating…

A: Solution- Operating leverage is the a degree to which a firm uses variable and fixed costs in…

Q: Michael Porter argues a firm cannot be at the same time a cost leader and a differentiator. Do…

A:

Q: Ceteris paribus, current financial market returns will increase as

A: Capital goods are those fixed assets for the company which help in the production process. They are…

Q: In what way can the use of ROI as a performance measure for investment centers lead to bad…

A: ROI:   It is a measure on the amount of return on a particular investment with respect to the…

Q: false?

A: Investment refers to the asset which is invested in the business for building the wealth and saving…

Q: From a strategic management perspective, the primary reason a firm performs CVP analysis is to find…

A: CVP Analysis: CVP analysis is used to determined the how the changes in volume and costs effect the…

Q: Do you think it is realistic for a smaller company to reach and enjoy this beneficial negative CCC?

A: CCC CCC stands for cash conversion cycle. It refers to the time taken in days by a business to…

Q: Lowering price does not always increase revenue with increased demand. Besides reducing price, what…

A: Reducing prices will not always stimulate demand to the desired extent especially in case of…

Q: Explain and give an example as to how a manager can manipulate the return on investment figure in…

A: Return on Investment The profit or loss received by an investor on investing a particular amount in…

Q: Give an example of a leveraged company that might have a spectacular ROE because the owners have put…

A: A company's capital structure can be formed with shareholders' funds(equity) and outside…

Q: If a company chooses to minimize WACC, what will be the effect on financial flexibility

A: Basic Terms :- Financial flexibility of the firm is the ability of the firm's capital structure to…

Q: Does competition from small start-ups really pose a big competitive threat to Oracle? Explain why or…

A: Competitive threat is defined as the competition in the market, which have not occurred though has…

Q: Explain with an example why managers find it difficult to adopt a decision alternative even when the…

A: Below is the answer-

Q: what if your company is being targeted by a SPAC would that be a good thing or a bad thing?  What…

A: Here discuss about the importance of the Special Purpose Acqusition company (SPAC) which are…

Q: How may using ROI as a success indicator for investment centers lead to poor decisions? How does the…

A: ROI: It calculates the amount of return on a particular investment about the investment's cost. The…

Q: Which of the following statements about operating leverage is false? O a. If the degree of operating…

A: Operating Leverage = %change in EBIT / % change in sales

Q: what if in the future, it will earn a negative RCE. Is this possible for a company? Why?

A: RCE = return on capital employed. ------------------------ Return on capital employed is the ratio…

Q: Which of the followings is NOT an advantage of financial institutions in consumption smoothing? A.…

A: Financial Institutions Institutions involved in financial transactions such as lending and borrowing…

Q: Which of the following statements about operating leverage is false? O a. All of the given answers…

A: Degree of operating leverage means the division of contribution with net income. It means that how…

Q: osts and long-run average costs? Explain the association between return to scale and economies of…

A: Economies of scale: This term refers to the cost advantage that a firm will gain as a result of a…

Q: businesses might use options – provide examples? How are options valued? What are the similarities…

A: They have been around for more than 40 years, but options are just now starting to get the attention…

Q: Which of the following statements about operating leverage is false? O a. Keeping all factors…

A: Operating leverage: It is a cost account accounting method or technique used by the firm to measure…

Q: In what way can the use of ROI as a performance measure for investment centers lead to baddecisions?

A: Return On Investment (ROI): It is a measure on the amount of return on a particular investment with…

Q: In competitive markets economic profit becomes zero in the long-run. However, it is also possible…

A: Economic profits and losses play a crucial role in the model of perfect competition. The existence…

Q: Compared to companies that have a cost structure that is mainly comprised of variable costs,…

A: Ans. Mostly companies incur two types of cost - Variable cost or fixed cost. Variable cost changes…

Managing Agency Conflict

Conflict is defined as an act of disagreement between two parties caused by uncertainties between them. The conflict has a negative outcome that affects both parties involved in the argument. Conflict arises when the parties' thoughts do not align or go in opposite directions. Conflicts have negative consequences for both the individual and the business. As a result, it should be avoided.