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2 years ago

The more ________ used, the greater the leverage a company employs on behalf of its owners.

Business

1 answer:

son4ous [18]2 years ago

8 0

The more debt used, the greater the leverage a company employs on behalf of its owners.

<h3>What is financial leverage?</h3>

Financial leverage exists as the usage of borrowed money (debt) to finance the purchase of assets with the anticipation that the income or capital gain from the new asset will surpass the cost of borrowing.

<h3>What is financial leverage example?</h3>

An example of financial leverage use contains utilizing debt to buy a house, borrowing money from the bank to begin a store, and bonds issued by companies.

Debt exists as an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another group, the creditor. Debt stands for deferred payment, or sequence of payments, which distinguishes it from an immediate purchase.

To learn more about financial leverage refer to:

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Which of the following statements is correct?a. Strategic situations are more likely to arise when the number of decision-makers

klemol [59]

Answer: d. Game theory is not necessary for understanding competitive or monopoly markets.

Explanation:

Game Theory in Business is applied to see the options available to competitors in the market if they engage in certain actions because the outcome of one party's decision is affected by the decision of the other party. In the context of business it is often used to calculate how much profit or loss companies will make if they engage in certain actions based on the decisions of the other party.

It is therefore not necessary in Perfect Completions because the market sets the price and the participants follow. There is not need to analyse what will happen if one party picks a certain method and the other as well. It will be irrelevant because the same price will be imposed regardless.

It is also unnecessary in Monopoly markets simply because a monopoly has market control and Game theory is for situations where at least 2 parties are fighting for market control.

8 0

3 years ago

Myers Corporation's stock currently trades at $40 a share. Investors estimate that the year-end dividend will be $2.00 a share a

Fofino [41]

Answer: 10.2%

Explanation:

The formula to solve this question will be: Re =D1/P0(1 - float) + g

where,

D1 = $2.00

P0 = $40

Float = 4% = 4/100 = 0.04

g = 5% = 5/100 = 0.05

We will then solve Myers' cost of new external equity by slotting the values into the formula written. This will now be:

Re =D1/P0(1 - float) + g

= 2/40(1 - 0.04) + 0.05

= 2/(40 × 0.96) + 0.05

= 2/38.4 + 0.05

= 0.052 + 0.05

= 0.1020

= 10.2%

Myers' cost of new external equity will be 10.2%

4 0

4 years ago

On August 1, 2019, Pereira Corporation has sold 1,600 Wiglows to Mendez Company at $450 each. Mendez also purchased a 1-year ser

Pani-rosa [81]

Answer: Please refer to Explanation

Explanation:

August 1,2019

DR Accounts Receivable - Mendez Company $739,200

CR Sales $720,000

CR Unearned Warranty Revenue $19,200

(To record Sales on Account to Mendez Company)

Dec 31, 2019

DR Warranty expense $9,200.00

CR Cash $9,200.00

(To record Warranty Expense incurred)

Dec 31, 2019

DR Unearned warranty revenue $8,000.00

CR Warranty revenue $8,000.00

(To record Warranty Revenue Earned)

Dec 31, 2020

DR Warranty expense $7,000.00

CR Cash $7,000.00

(To record Warranty Expense Incurred)

Dec 31 2020

DR Unearned warranty revenue $11,200.00

CR Warranty revenue $11,200.00

(To record Warranty Revenue Earned)

Workings

Sales

=1,600 wiglows * $450

= $720,000

Unearned Warranty Revenue - this is the amount that Mendez paid for a one year service-type warranty.

= 1,600 * 12

= $19,200

Warranty Revenue for 2019.

The warranty was for a year but only 5 months have passed at year's end since August 1 so the 5 months will be apportioned to enable it to be recorded for 2019, the total Unearned Warranty Revenue received will be apportioned as such,

= 5/12 * 19,200

= $8,000.

So $8,000 will be considered as earned for the year 2019.

Warranty Revenue 2020.

The rest of the Warranty will be recorded and earned in 2020.

= 19,200 - 8,000 (amount for 2019)

= $11,200

The Unearned Warranty Revenue remaining will be reported as a Current liability as the period of a Year has not expired and so it cannot be considered as earned.

Dec 31 2019

Partial Balance Sheet.

Current Liabilities

Unearned warranty revenue $11,200.00

8 0

3 years ago

Read 2 more answers

On January 1, year 4, Griffin, Inc. purchased 12% of Hydra Co.’s common stock. At that time Griffin did not have the ability to

cricket20 [7]

Answer:

Only 35% of the dividend arising from September to December, 2014 would be recognized as revenue in the income statement.

Explanation:

The remainder of the income is not relevant as it was accounted for under the market value method because the share holding was below the associate shareholding. Under the market value method, gain and losses on the increase and decrease of market value of investment are recognized in the comprehensive income statement.

The equity method says that the income from the investment is only recognized if the shareholding is above the shareholding requirement of associate. So from the month the investment was considered as an associate investment which is September, 2014 and onwards, the firm must recognize dividends received from this date as an income in its financial statement.

4 0

3 years ago

Why does a surplus exist under a binding price floor? It encourages sellers to produce less of the product. It encourages buyers

lapo4ka [179]

Answer:

The correct answer is it makes price higher so demand falls, creating excess supply.

Explanation:

In a price floor, their is a floor limit on price. The price level cannot go below this limit. At high price the consumers will demand less, following the law of demand. While the suppliers will supply more, following the law of supply.

So, the supply will be greater than demand creating surplus quantity in the market.

3 0

3 years ago

The more​ ________ used, the greater the leverage a company employs on behalf of its owners.

The more ________ used, the greater the leverage a company employs on behalf of its owners.