Explanation:
Starbucks noted a gross margin of 29.6% in 2018 and 28.2% in 2019. Therefore, just like we had discussed above the gross margins might be impacted in the medium term due to competitive pricing strategies to win market share in China and competition from McDonald's. McDonald's noted a gross margin of 46.5% and 51.3% in the last two fiscal years. Starbucks deals with premium coffee and other food products and therefore has a lower gross margin compared to McDonald's whose volumes are driven by its friendly pricing.
The debt to capital ratio rose from 86.8% in 2018 to 216.4% in 2019. Expansion in a new market comes with higher capital which leads to an increase in the costs in the form of interest expenses. McDonald's debt to capital ratio for the last two fiscals were 107.8% and 119.4% respectively. The increase in debt was driven by the ongoing efforts towards bringing innovations to the company's menu, restaurants and other related matters to drive the revenue and profits.
The return on equity stood at 136.2% in 2018 and turned into a negative 142.2% in 2019 due to the stockholder deficit. The higher capital issue associated with the expansion might worsen the returns further. McDonald's noted a negative return on equity of 189.8% and 124.4% in the last two fiscals.
Starbucks and McDonald's have noted a spike in their capital expenditure to increase their market share. Both the companies are focused on their respective strategies of geographical expansion and store and menu renovation. The gross margin expansion of Starbucks will be intially driven by higher volumes from friendly pricing and loyalty programs. Once it has gained market share it will take the help of pricing power to drive revenue in the 1.4 billion Chinese economy. McDonald's has already won market share through its friendly pricing policies leading to higher volumes. The store and menu renovation and loyalty programs will further add value to the margins.
The growth in revenue and profits will help the companies to gradually repay and lower their debt levels. All of which will drive their net incomes and convert their stockholder deficit into a positive stockholder equity.
Once the companies start expanding their profits and margins then the return on equity will also turn positive and will witness growth.
The three basic question of economic is
What to produce
How to produce
For whom to produce
Therefore the answer would be
1.How will the goods and service be produced
2.How will the goods and service be produced
3.Who will consume the goods and services
Answer:
The correct answer is B. The use of collateral makes it more costly for borrowers to take advantage of their asymmetric information.
Explanation:
In finance, a collateral or guarantee is a transferable asset or a surety, or even a promise of guarantee, used to cover the credit risk during financial transactions in the event that the borrower cannot meet his payment obligations.
A secured loan means a loan in which the borrower commits certain assets as a guarantee of credit, this the latter then becoming a partially secured debt for the creditor who made this loan.
The guarantee may consist of cash (pledge of cash account in retail bank, cash-collateral in investment bank) or securities.
Another form consists of a simple commitment: commitment by signature of a bank towards its client, promise of collateral or mortgage, letter of intent.
Answer:
$95,160
Explanation:
The total employment compensation of an individual is the gross pay that they are receiving as well as the value of all of the benefits that they are receiving from employment. Then you would need to discount job expenses. In this scenario, after the increase in pay, Nika's gross pay is now $78,000. If her employee benefits are 22% of the gross pay then they would be
78,000 * 0.22 = 17,160
Now we add the value of her employee benefits to her gross pay in order to calculate her total employment compensation
78,000 + 17,160 = $95,160
