CORPORATE FINANCE(LL)
11th Edition
ISBN: 9781260430011
Author: Ross
Publisher: MCG
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Chapter 1, Problem 3CQ
Summary Introduction
To evaluate the statement:
The managers must not concentrate on the present stock value because doing so will lead to an over emphasis on short-term profits at the expenses of long-term profits.
Introduction:
Any profits that arise during a course of time, that is, less than twelve months, are considered short-term profits or gains. Any profits that arise during a course, that is, more than 12 months, are considered long-term profits or gains.
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Evaluate the following:Managers should not focus on the current stock value because doing so will lead to an over emphasis on short term profits at the expense o long term profits
Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on the short term profits at the expense of long-term profits.
Explain how managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits.
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- Short-term thinking can be disastrous for a business. What indicators are there to show that financial managers at Range take long-term approach to financial performance and control?arrow_forwardExplain intuitively how a manager could tweak the salvage value of machinery to benefit from an expected reduction in the corporate tax rate taking place towards the end of an investment. What are the shortcomings of the payback period criterion? Which of these shortcomings are accounted for in the dynamic payback period criterion? Which are not? “If a stock had high returns so far, it will have low returns in the future”. Discuss whether this statement is true or false, based on the knowledge of the different theories and models out there.arrow_forwardTRUE or FALSE: Managers always attempt to maximize the long-run value of their firms' stocks, or the stocks' intrinsic values. This is exactly what stockholders desire. Thus, conflicts between stockholders and managers are not possible.arrow_forward
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