1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Veronika [31]
3 years ago
5

Define agency costs, and describe agency costs of financial distress and agency benefits of leverage

Business
1 answer:
Aleks04 [339]3 years ago
5 0

Answer:

In accounting, agency costs are the costs of hiring an agent in order for him/her to act on behalf of a principal. In finance, agency costs are much broader since they imply costs that may appear due to conflicts of interests between the agent and the principal. E.g. a manager who seeks to accomplish short term goals in order to collect a bonus but hurts the long term objectives and goals of the stockholders.

Agency costs of financial distress refers to the costs associated with conflicts of interest that may result in a company being insolvent, specially in the long run. This type of costs are not necessarily related to operating costs, instead they result from management decisions and strategies, e.g. higher cost of capital or debt, or even excessive spending.

Agency benefits of leverage result from stockholders benefiting from the agent's decision to keep equity low, and if needed, obtain financing from debt sources.

You might be interested in
Pollution caused by candles isn't taken into account.Quality improvements as a source of well-being are ignored.GDP doesn't capt
hammer [34]

Answer:

D. The marginal cost of light is zero, and by convention zero-priced goods and services are excluded from GDP

Explanation:

Only things that have a monetary cost are included in GDP. Things that do not cost "anything" in monetary terms are not included, and this is a major shortcoming of GDP.

From an ecological economics standpoint, things like sunlight, air, and water are often not valued and included in GDP. This is the same case as in the question, because the marginal cost of light is zero, then, it is not included in GDP.

3 0
3 years ago
Households and firms with savings lend money to banks and other financial institutions. The credit supply curve shows the relati
rosijanka [135]

Answer:higher real interest rate discourages current consumption and higher real interest rate encourages more saving.

Explanation:The supply curve is a graphic representation of the correlation between the cost of a good or service and the quantity supplied for a given period. In a typical illustration, the price will appear on the left vertical axis, while the quantity supplied will appear on the horizontal axis.

Our measure of credit demand is an indicator variable for a firm's need for bank loans decreasing during the period. We measure credit supply using information on whether a firm's loan application was rejected, or the firm received less than 75% of its desired amount.

Credit supply curve is a curve that plots the quantity of credit supplied at different real interest rates.

4 0
2 years ago
What can we learn from the employment data? Assume Country X has the following statistics: Total relevant population = 50,000,00
svlad2 [7]

Answer:

Country x

Population size 50,000,000

Full time students 4,200,000

Not employed & not searching 6,000,000

Not employed and searching 2,336,000

Employed 29,664,000

Labour force is defined as the population of the economy currently engaged in some employment and those jobless but available or searching for employment

Labour force is 32,000,000

Labor force participation rate is the labor force divided by the population size.

= 64%

Unemployment rate is defined as members of a country not employed and are searching or seeking employment.

= 4.7%

3 0
2 years ago
On the end-of-period spreadsheet, Supplies has a balance of $2,000 in the Unadjusted Trial Balance Debit column and an adjustmen
Mademuasel [1]

Answer:

$1,500

Explanation:

On the end-of-period spreadsheet, the credit adjustment of $500 is made in the Debit balance of Supplies inventory, which will net off the values and resulted Supplies Inventory value will be $1,500 at the end of the year and it will be reported on the financial statements. $1,500 should be appeared for supplies in the adjusted Trial Balance column.

7 0
3 years ago
The WorldLight Company produces two light fixtures (products 1 and 2) that require both metal frame parts and electrical compone
Deffense [45]

Answer:

Explanation:

a) x1 = number of unit product 1 to produce , and

x2 number of unit product 2 to produce

A linear program that will maximize world light profit is the following

maximize x_1+2x_2 subject to x_1+3x_2\leq 200

2x_1+2x_2\leq 300\\\\x_2\leq 60\\\\x_1\geq 0\\\\x_2\geq 0

Unit 1 is used both in products in 1 : 3 ratio which can be a maximum of 200 unit 2 is used in 2 : 2 ratio which can be maximum of 300

So, this can be written as the inequations

Profit functio is p = 0ne dollar on product A and two dollar on product B

= x + 2y

Now , we find a feasible area whose extremeties will give the maximum profit for, the  graph is ( see attached file )

So on the graph, we can get the other extremeties of the shaded regional so which will not give maximum profit ,

Thus , the maximum possible profit is

p = ($1 * 125) + ($2 * 25)

= $175

4 0
3 years ago
Other questions:
  • As they embrace the new advertising opportunities technology affords them, sports and entertainment marketers must be careful no
    5·1 answer
  • A Chinese toy manufacturer has received criticism by people in the surrounding community who have complained about the pollution
    12·1 answer
  • "john is a drug dealer who wants to make quick money. john is an example of a"
    12·2 answers
  • Suppose price is initially $20, but then decreases to $15. The absolute value of the percentage change in price (using the midpo
    11·2 answers
  • Walmart created the Great Value brand for their food products and the Equate brand for their​ pharmacy, health, and beauty produ
    9·1 answer
  • The sole responsibility of management with regard to financial reporting involves preparing and presenting financial statements
    10·1 answer
  • The inventory on hand at the end of 2019 for Reddall Company is valued at a cost of $94,000. The following items were not includ
    6·1 answer
  • Spud, Inc. a manufacturer of gourmet potato chips, employs activity-based costing. The budgeted data for each of the activity co
    9·1 answer
  • Mike deposited $100,000 in a bank and procured a certificate of deposit on it, payable to himself, for repayment in five years w
    12·1 answer
  • Suppose that you just paid $76,000 for a security that will make its first payment to you in 7 years from today. It will continu
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!