Why would a company choose to factor itsreceivables, given that it will get less money than thereceivables are worth?

Q: What is capital rationing?

A:

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

A: Net income: The bottom line of an income statement which is the result of excess earnings from…

Q: Even if prices follow a random walk, they still may not be informationally efficient. Explain why…

A: Random walk theory laid down that the prices of a stock changes in an unpredictable manner.…

Q: What does a negative value for unlevered free cash flow imply for the claimants of a firm

A: Unlevered free cash flow for a company is that free cash flow which is determined and computed…

Q: Why we have to valuate the company?

A: Value of a business refers to the business value. It shows the worth of the business as on a…

Q: Why would a company decide to pay investors cash? What are the two ways to give cash back to…

A: Cash is paid in terms of dividends.

Q: What would be the impact on short-term operating income if the company were to accept the offer from…

A: Computation of impact on short - term operating income , if the company accept this offer from the…

Q: Can Retained Earnings grow too large? If so, what strategies might management take to reduce it

A: Answer: Retained earnings is the cumulative or collective profit hold by company in shareholders…

Q: Would the profit change associated with sales changes be larger or smaller if a firm increased its…

A: Operating leverage refers to fixed cost level associated to the operations of a company. A company…

Q: What can be said about a firm whose owners’ equity is a negative amount? How could such a situation…

A:

Q: Why is a firm’s value maximized if it invests to the point where its marginal return onnew…

A: The firm’s value is maximized when the Marginal return on new investment is equal to the kc because…

Q: If an investment project will positively affect the cash flows of other products the firm currently…

A: Cannibalization can be defined as the negative effect on the existing business line or the product…

Q: Is capital rationing always a bad thing? Explain

A: Capital rationing: Capital rationing is restriction bestowed upon new investments in the…

Q: If a company lowers its cash dividend payment, does that always send a bad signal? If not, provide…

A: Every company receives their capital in the form of equity or debt. Equity is from the shareholders…

Q: If the firm borrows money at a significantly lower rate, this factor affects the firm's MARR. How?

A: If the firm borrows money at a lower rate then, MARR will also be lower.

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: Why do companies don't distribute all their profit

A: Company means a form of business where the share holder invest money in business in form of shares…

Q: How will a company view working capital – positive, negative, or a necessary evil?

A: The difference between current assets and current liabilities is used to calculate working capital.…

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

A:

Q: what is the first price the company setts the pen lo have marginally profitable? Knowing that

A: The length of time it takes for an investment to generate a profit after the initial outlay of…

Q: Explain how a company can be “profit rich, yet cash poor.”

A: Corporation: A corporation is a form of business entity that is incorporated through the state…

Q: Can you identify a possible explanation for the company’s declining profits? If so, what is it?

A: Company's declining profits can be possible due to overhead expenses.  Overhead costs are the…

Q: Why do larger financial intermediaries tend to have lower transaction costs?   A. Diseconomies of…

A: Financial intermediaries minimize exchange costs by leveraging economies of scale, take a toll…

Q: false?

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

Q: Do you think investors should practice dollar cost averaging when investing their money? Why or why…

A: Dollar-Cost Averaging: Dollar-Cost averaging is an investment approach that involves investing an…

Q: What major advantage does a company that has positive free cash flow have over a  company that has…

A: Free cash flow : It is defined as a financial performance metric which shows how much funds are…

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: Would a firm that has many good investment opportunities be likely to have ahigher or a lower…

A: We can measure the average worth of the company through dividend value. The dividend payout ratio is…

Q: What is free cash flow, and how does it work? If you were an investor, why could you be more…

A: When all operational costs and capital expenditures have been met, free cash flows represent the…

Q: In financial markets, if there is an untapped profit opportunity, arbitrageurs will realize it and…

A: The term market refers to a place where the buying and selling of anything take place between two…

Q: Why short selling are risky than buying margin?

A: Short selling is riskier than buying on margin.   Short selling is borrowing shares from your broker…

Q: What is causing the volatility for this company? Is anything in this statement unusual or concerning…

A: when analysing the company financials it is important to consider the every variables as it affect…

Q: What are the advantages/disadvantages of using the market multiples method to estimate the value of…

A: It is a valuation strategy that decides the distinctive market values for similar organizations.…

Q: Why are the companies with low cash flow unable to bear the risk of a large project?

A: Cash flows are the inflow and outflow of cash and cash equivalents within an organization.A company…

Q: How can the company, which is a profitable one, have insufficient cash flows? Explain your answer.

A: Quickclick Media Ltd. announces that their profits in the current year have increased over the…

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.…