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vaieri [72.5K]
3 years ago
8

How might differences in the extent to which countries apply the accounting concept of conservatism (some countries are more con

servative than others) affect profit margins, debt-to-equity ratios, and returns on equity
Business
1 answer:
-BARSIC- [3]3 years ago
6 0

Answer:

Conservatism in Accounting refers to the policy of being more pessimistic than optimistic. This policy believes that future losses should be anticipated over future gains as future losses are more damaging and probable. It is essentially 'Playing Safe' Accounting. This leads to Income and Assets being understated and Expenses and Liabilities being overstated.

Profit Margins.

As the policy allows for the anticipation and recognition of expenses more than gains, Profit margins will be lower in this type of accounting as Revenue will be less but Expenses will be more.

Debt-to-Equity Ratios

Debt to Equity ratios will be higher because this policy calls for a speedier recognition of Liabilities as well. With the formula for Debt to Equity being Debt over Equity, a larger recognition of debt will mean this equation will yield higher figures. Also a component of Equity is Retained Earnings which comes from Net income and as already stated, this will be less under this policy thus decreasing the denominator of this equation as well.

Returns on Equity.

Return on Equity is calculated by dividing the Net Income by Equity. This figure will be smaller but not by much because this policy as already shown will reduce the both the Net income and the Equity but the Net Income will likely suffer a greater hit than Equity.

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We can imagine the financial manager doing several things on behalf of the firm’s stockholders. For example, the manager might d
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Answer:

A

Explanation:

One of the responsibilities of a financial manager is to direct investment activities towards increasing the market value of an organization and also support the long term financial goal of the firm.

In as much as the financial manager is expected to act in the best interest of the shareholders , he should not be bias towards them in carrying out his responsibilities,

Therefore , the best option of the given alternatives in the scenario is the he should work towards increasing the market value by investing in real assets.

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3 years ago
One recurring problem in supply chain management is when information about the demand for a product gets distorted as it passes
vfiekz [6]

Answer: Bullwhip Effect

Explanation:

The Bullwhip Effect occurs as a result of changes in the original information about the demand of a product as the information passes across the supply chain.

In the Bullwhip Effect small changes at the customers end of the supply chain leads to large variation in the manufacturing end of the chain.

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3 years ago
A ticket reseller purchases a ticket to a football game for $40 and offers it for sale at a price of $75. A consumer is willing
Burka [1]

Answer:

profit + consumer surplus.

Explanation:

The profit obtained by the reseller is given by the difference between the amount received on sale ($75) and the purchase price ($40). The consumer surplus is determined as the difference between the willingness to pay ($90) and the actual amount paid ($75). Therefore, the difference between $90 and $40 is the profit plus the consumer surplus.

7 0
3 years ago
If the price of pants increases, what would you expect would happen in the market for pants?
worty [1.4K]

Answer: There will be a surplus at the increased price.

Explanation: Acc. to the law of demand as the price of a good rises the quantity demanded for the good will fall. This is represented by a movement up along the demand curve.

Acc. to the law of supply as price of a good rises the sellers will supply more units of the good. This is represented by a movement up along the supply curve.

At the increased price, there will be a surplus in the market given by Q's - Q'd.

Eventually, the surplus will lead to a fall in the price of pants till demand for the good is equal to its supply.

6 0
3 years ago
Read 2 more answers
Round Dot Inns Is preparing a bond offering with a coupon rate of 6 percent, paid semiannually, and a face value of $1,000. The
lbvjy [14]

Answer:

a.The bonds will sell at a premium if the market rate is 5.5 percent.

Explanation:

Following information provided in the question

Coupon rate = 6%

Face value = $1,000

Time period = 10 years

And if we consider the interest rate 5.5%

So as we can see than the interest rate or market rate is less than the coupon rate or we can say that the coupon rate is more than the market rate so the bond is sell at a premium

6 0
3 years ago
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