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The operating cycle is the length of time from when a company makes an investment in goods and services to the time it collects cash from its accounts receivable. The net operating cycle is the length of time from when a company makes an investment in goods and services, considering the company makes some of its purchases on credit, to the time it...
30 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 661 | Lượt tải: 0
The operating cycle is the length of time it takes a company’s investment in inventory to be collected in cash from customers. The net operating cycle (or the cash conversion cycle) is the length of time it takes for a company’s investment in inventory to generate cash, considering that some or all of the inventory is purchased using credit. The ...
32 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 585 | Lượt tải: 0
The separation of ownership and management in a corporation may lead to suboptimal investment. Management may invest in negative NPV projects to enhance the company’s size or management’s control. Jensen’s free cash flow hypothesis is that having free cash flow tempts management to make investments that are not positive NPV. Paying dividends or ...
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A stock dividend is the distribution of additional shares of stock to shareholders on a pro rata basis. Also known as a bonus issue of shares. Generally stated as a percentage of current shares outstanding. A stock dividend does not change a shareholder’s proportionate ownership, the shareholder does not receive cash, and there are no tax conseq...
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Costs of financial distress are costs associated with a company that is having difficulty meeting its obligations. Costs of financial distress include the following: Opportunity cost of not making optimal decisions Inability to negotiate long-term supply contracts. Loss of customers. The expected cost of financial distress increases as the re...
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Operating risk is the risk associated with the mix of variable and fixed operating expenses. Operating risk is the sensitivity (i.e., elasticity) of operating earnings to changes in unit sales. The degree of operating leverage (DOL) is the ratio of the percentage change in operating income to the percentage change in units sold. The per unit con...
21 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 617 | Lượt tải: 0
The investment opportunity schedule (IOS) is a representation of the returns on investments. We assume that the IOS is downward sloping: the more a company invests, the lower the additional opportunities. That is, the company will invest in the highest-returning investments first, followed by lower-yielding investments as more capital is availab...
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Capital rationing is when the amount of expenditure for capital projects in a given period is limited. If the company has so many profitable projects that the initial expenditures in total would exceed the budget for capital projects for the period, the company’s management must determine which of the projects to select. The objective is to maxim...
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Shareholders entrust management with funds from reinvested earnings or newly issued stock, which management invests. The overarching objective is to maximize shareholders’ wealth. Issue: Managers are human Managers may be more interested in expanding the size of the business, bonuses based on earnings, taking on excessive risks, or job security....
29 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 644 | Lượt tải: 0
Tình huống 2: Dựa trên các báo cáo dự báo tài chính của công ty trong năm 2014. a) Công ty sẽ tăng trưởng với tốc độ bao nhiêu mà công ty không cần phải huy động thêm vốn từ bên ngoài b) Tính tốc độ tăng trưởng bền vững của công ty
27 trang | Chia sẻ: thuychi20 | Ngày: 07/04/2020 | Lượt xem: 669 | Lượt tải: 0