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3 years ago

How does economic factors affect business.

Business

1 answer:

OverLord2011 [107]3 years ago

8 0

Answer:

Economic factors directly impact business and are essential factors that can help or impede the organisation in accomplishing its targets. Financial factors that ordinarily influence organizations to incorporate wages, loan and banking transactions. Overall, micro and macroeconomic both factors play a crucial role in predicting and forecasting business dealings and there long-term stability and growth.

Explanation:

Some of the significant economic factors that influence businesses directly are exchange rate, interest rate, unemployment rate, inflation rate, monetary policy, fiscal policy, taxes and many other micro and macro variables factors undertake a critical job in assessing how the business will perform in long- run and how much profits they will make.

Interest rate directly affects the loan ratio, which is linked with banking transactions. Those businesses which are associated with banks and rely heavenly on taking out large loans are affected by the economic decision regarding interest rate fluctuations. The exchange rate has diverse effects of business; however, they significantly affect business which is linked with import and exports. Changing exchange rates may influence how a lot of an organization needs to pay to its global partners to fulfil them, which can influence overall revenues.

Taxes are an essential element of fiscal policies of the government which affect business, and usually, organisations make decisions by predicting next year’s fiscal policy. Increase in taxes negatively affects the revenue generation of businesses, and it affects their profitability. On the other hand, an increase in the gross domestic product (GDP) of a country positively affect businesses, and it helps businesses to go domestically, and globally it provides locals with job opportunities and more wealth generation for businesses. Furthermore, economic policy is also strongly linked with another all factors and play a vital role in overall business growth or decline in a country. In general, economics is an essential factor which can influence organizations. Although they relate to the economy on a broader scale, they significantly affect the inward activities of every business and organization.

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When buying highly technical, few-of-a-kind products such as hydroelectric power plants, governments have found that general con

Lubov Fominskaja [6]

Answer:

Cost-plus-fixed-fee pricing

Explanation:

Cost-plus-fixed-fee pricing is when the contractor specifies the expenses of a project and a fixed fee for the services that provides which allows the contractor to earn a profit. In this type of pricing, the overall cost of the project is determined at the end and all the authorized costs are paid to the contractor in full. According to this, the answer is that these contractors use cost-plus-fixed-fee pricing to compensate them for any cost overruns.

7 0

3 years ago

On January 1, Greenview Company adopted the dollar-value LIFO method. The inventory cost on January 1 was $112,000. On December

Mumz [18]

Answer:

125,200

Explanation:

Adjust inventory to base year prices:

= Cost of ending inventory ÷ cost index for the year

= $136400 ÷ 1.1

= $124,000

Current year LIFO layer:

= Adjust inventory to base year prices - Cost of beginning inventory

= $124,000 - $112,000

= $12,000

Inventory to be shown:

= Add the new LIFO layer at end of period prices to prior year LIFO inventory

= (112,000 × 1) + (12,000 × 1.1)

= 112,000 + 13,200

= 125,200

7 0

3 years ago

Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $1

uysha [10]

Answer:

a). Accounting profits=$6,000

b). Economic profit=-$6,000

Explanation:

a). The accounting profits for Gomez's pottery firm can be expressed in the form;

Accounting profits-Total monetary revenue-Total monetary expenses

where;

Total monetary revenue=$86,000

Total monetary expenses=excludes opportunity cost=wages+rent+materials+equipment=(14,500+7,500+18,000+40,000)=$80,000

replacing;

Accounting profits=(86,000-80,000)=$6,000

Accounting profits=$6,000

b). Gomez's economic profit

Economic profit=Total revenue-total costs

where;

Total revenue=(86,000+5,000+6,000)=97,000

Total costs includes opportunity cost=(80,000+23,000)=103,000

replacing;

Economic profit=(97,000-103,000)=-$6,000

Economic profit=-$6,000

6 0

3 years ago

Question 26 The Paper Mill is operating at full capacity. Assets, costs, and current liabilities vary directly with sales. The d

Lesechka [4]

Answer:

$2,260

Explanation:

The computation is shown below:

Present sales revenue $42,700

Expected sales revenue ($42,700 × 114 ÷ 100) $48,678

Current profit margin ($5,500 ÷ $42,700 × 100) 12.88%

Payout Ratio:

Dividends (a) $1,925

Net Income (b) $5,500

Payout Ratio (a ÷ b × 100) 35%

Retention Ratio (100% - 35%) 65%

due to 14% rise in sales Increase in retained earnings ($48,678 × 12.88 ÷ 100 × 65 ÷ 100) $4,075.32

due to 14% rise in sales, Increase in assets ([$48,678 - $42,700] × $48,900 ÷ $42,700) $6,846

due to 14% rise in sales, Increase in liabilities ([$48,678 - $42,700] × $3,650 ÷ $42,700) $511

when sales rise by 14% External Financing Needed ($6,846 - $4,075.32 - $511) $2,260

7 0

3 years ago

Performance Obligation Fulfilled Over Time Philbrick Company signed a three-year contract to develop custom sales training mater

MAXImum [283]

Answer:

Philbrick Company

Performance Obligation Fulfilled Over Time

Computation of the revenue, expense, and gross profit:

Year Number of Development Sales Gross

Employees /Training Cost Value Profit

2019 150 $ 55,000 $165,000 $110,000

2020 250 70,000 275,000 205,000

2021 100 20,000 110,000 90,000

Total 500 $145,000 $550,000 $405,000

Explanation:

a) Data and Calculations:

Contract price = $1,100 per employee

No. of employees to be trained = 500

Total contract value = $550,000 ($1,100 * 500)

Expected Development and Training Costs:

Year Number of Development

Employees /Training Cost

2019 150 $ 55,000

2020 250 70,000

2021 100 20,000

Total 500 $145,000

6 0

3 years ago