Answer:
D. Cost of debt (rd)
Since more debt is taken, the interests payments or cost of debt should increase.
E. Cost of equity (rs)
More leverage = higher risk, and higher risk = higher cost of equity.
Explanation:
Return on assets will probably decrease, because the assets should remain the same but net income should decrease.
Net income will probably decrease because the company will now pay more interests due to higher debt.
Basic earning power should remain unaffected, because EBIT and assets should not change.
Answer:
D. When a desirable product or service is scarce, its value increases.
Explanation:
Demand is the volume of a commodity or service that buyers are willing to purchase in the market at a given price. Supply refers to the quantity of service of a product that suppliers are willing to avail in the market for sale. The law of supply and demand illustrates the interactions between buyers and sellers.
As prices increase, sellers are willing the supply more, but buyers will want to buy fewer quantities. The opposite is also true. Products that provide a higher utility value will always attract high prices. If such products are scarce, their prices are bound to go even higher.
Answer:
a) subtotals of each of the three main sections.
Explanation:
A cash flow statement is a representation of the cash inflows and outflows from various activities in a business. The three main sources of cash flow are operating activities, investing activities, and financing activities.
Operating activities include daily production activities that a business usually engages in like manufacturing or selling.
Financing activities are those that affect the capital base of the organisation.
Investing activities are those that involve purchase or sale of assets, and investment in securities.
To get a better knowledge of the cash flow of the organisation we will need to evaluate subtotals of each of these three sections
The Inventory Turnover Ratio, which can be calculated by dividing the cost of goods sold by the average inventory balance, can be used to measure how long a company keeps inventory before selling it.
Businesses may make better judgments in a range of areas, such as pricing, production, marketing, purchasing, and warehouse management, by measuring and calculating inventory turnover. In the end, the inventory turnover ratio measures how well the business makes sales from its inventory.
Inventory Turnover Ratio = Cost of Goods Sold / Avg. Inventory
Average inventory = (beginning inventory + ending inventory) / 2
The inventory turnover ratio calculates how frequently inventory is sold and replaced during a specific time frame.
Learn more about Inventory Turn over ratio here
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Answer:
3.37 years
Explanation:
Calculation to determine what The payback period of the project is closest to
First step is to calculate the Net Cash inflow for the year
Net Cash inflow for the year =$114,000-$31,000
Net Cash inflow for the year =83,000
Now let calculate the Payback period
Using this formula
Payback period=investment/Net Cash inflow for the year
Let plug in the formula
Payback period=$280,000/83,000
Payback period=3.37 years
Therefore The payback period of the project is closest to 3.37 years
