Why should the managers make investment decisions on the basis of cashflows rather than profits?

Q: Why are accruals called spontaneous sources of funds, what are their costs, and why don't firms use…

A: Under the business setting, the spontaneous funds source states to the financing that arises from…

Q: As a Businessman and Entrepreneur, which do you think is more important between Return On Asset…

A: ROA is the return on assets and ROI is the return on investment.

Q: How do the DuPont technique helps the firm’s managers to further analyze its returns?

A: DuPont analysis is referred to as the framework regarding the analysis of the fundamental…

Q: Explain "free cash flows." Why do managers like to retain free cash flows instead of distributing it…

A: Free cash flows (FCF) equals the amount left with the company after the required payments to the…

Q: Why does capital budgeting rely on the analysis of cash flows rather than on net income

A: Capital budgeting : Capital project is a major expenditure that’s required to purchase a machinery…

Q: d. Explain why NPV is considered technically superior to Payback and Accounting Rate of Return (ARR)…

A: There are various capital budgeting methods that can be used to assess or evaluate various…

Q: Cashflow vs. net income: Which strategy is more appropriate?

A: instruction: The direct and indirect routes to a cash flow statement are both found there.

Q: Which of the following does not assign a value to a business opportunity using time-value…

A: Answer : D Payback period method

Q: __________ is the cost of available funds for a company, which acts as a hurdle rate that the…

A: Cost of capital is also known as weighted average cost of capital

Q: If markets are truly efficient, does it matter whether firms engage in earnings management? On the…

A: If the company concentrated on earnings management then the market is not truly efficient.

Q: Why is it that the goal of financial management is maximization of shareholders’ wealth rather than…

A: Financial management is defined as the planning, organizing, directing, and also the controlling of…

Q: up between owners and managers and how

A: Profit maximization and value maximization are two financial management approaches that define the…

Q: Which of the following is not an approach to replacement analysis? Solve, a. Cash flow approach b.…

A: Replacement analysis is the study of organizing, reasoning and implementation of successful…

Q: Should firms focus on book value or market value capital structures? How would the calculatedWACC be…

A: In all actuality, the organization will have the option to utilize the capital structure dependent…

Q: Why do you think capital investment decisions are some of the most important decisions that…

A: Capital investment refers to all those activities that a business entity undergoes while allocating…

Q: cash

A: The term cash flow refers to the  net of cash after considering the inflows & outflows. Inflows…

Q: How behavorial bias affect investment behavior?

A: Behavioral bias is the belief by the investors that unknowingly affects the investors investment…

Q: Cash Flow and Early Exits Why can it be misleading to use a firm's working capital to discuss cash…

A: Firm’s working capital can be determined by calculating the difference between the current assets…

Q: What is the market economy?How dothe financial marketsinteractwith product and labor markets to…

A: The Market economy is an economy model in which all the decision regarding the demand and supply of…

Q: Which financial statements are more useful to consumers than others when it comes to cash flow…

A: The question tells about financial statements are more useful to consumers than others when it comes…

Q: How can a company’s operations generate a healthy profitand yet produce meager or even negative cash…

A:

Q: what does it mean to say that managers should maximize shareholders wealth subject to ethical…

A: Share- It is a unit of ownership in a company's capital. It entitles the shareholder to an equal…

Q: Is net operational cash flow a better indicator of performance than accrual-based net income in most…

A: Earned income is reported on a company's income statement using the accrual accounting technique…

Q: Why can it be misleading to use a firm's working capital to discuss cash flow without further…

A: Working capital and cash flows are the important aspects of an organization that helps an investor…

Q: Explain "frce cash flows. Why do managers like to retain free cash flows instead of distributing it…

A: Free cash flows : As the name suggests, free cash flows relates to the fund that are leftover to a…

Q: What are some of the pros and cons of using stockoptions to compensate managers?

A: Employee stock options: Stock options are the non-monetary incentives that are given to particular…

Q: Why would managers misrepresent the financial results oftheir companies?

A: Fraud:   It is an intentional misappropriation of the assets or the financial records of an…

Q: analyze

A: Profitability analysis refers to allocation of expenses & analyzing the profits or earnings of…

Q: Explain how differential weight to losses and gains effect investment decisions?

A: Prospect Theory assigns differential weight to losses and gains for making investment decisions.

Q: What is risk? Why must risk as well as return be considered by the financial manager who is…

A: Risk is associated with every business it is one of the important functions of the management to…

Q: Why should companies use a project’s free cash flows rather than accountingincome when determining a…

A: Capital budgeting analysis is useful to know which projects are profitable and which are not. There…

Q: Practice : a: The computation of return on average investment ignores one characteristic of the…

A: Capital budgeting refers to the technique of evaluating a project for investing in it. It has…

Q: Critically evaluate and compare the firm’s Profit and Loss Statement and the Cash Flow Statement and…

A: Both the statement some harmony and some contradict because profit 2020 has decreased from the 2019,…

Q: why do firms use non financial measures

A:

Q: Explain how sunk costs and cannibalisation affect the determination of an investment’s incremental…

A: Introduction : . Simply put, sunk costs refers to the costs that has already been incurred and the…

Q: If youre a financial managers, what do you think is the importance of a proper capital structure.?…

A: Capital structure: Capital structure of an organization means the way in which the funds of a…

Q: Which of the following statements is false? A. Net incomes are not cash flows. Financial Managers…

A: Capital budgeting are the process through which the firm decide which project to take up.

Q: Why should companies use a project’s cash flows rather thanaccounting income when determining a…

A: Net Present Value is the difference between the current value of cash inflow and cash outflow for a…

Q: Can a firm have income without also having a positive cash flow? Explain.

A: Cash Flows are the inflows & outflows of cash in the business to meet the day to day activities.…

Q: Why are statistical approaches and tools important in investment decision-making?

A: This question explains about the statistical approaches and tools that are important in investment…

Q: Is the accounting rate of return (ARR) the same thing as the return on investment (ROI)?

A: Yes, Accounting rate of return (ARR) the same thing as the Return on investment (ROI). The…

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.