Answer:
the correct answer is
Micropreneurs are exempt from the local ordinances that restrict home-based businesses from operating in residential areas.false
$295,000 is the yearly depreciation using the double-declining-balance method.
The double declining balance approach is predicated on the idea that an asset's value depreciates quickly, faster at the start of its useful life than at the end.
Therefore, we will figure out the straight-line depreciation amount and then double it to figure out the twofold decreasing balance. A $900,000 asset value divided by three years equals $30,000 for the first year. Given that the dropping balance is twofold, the straight-line depreciation amount is multiplied by two.
Straight-line method we would just take the $900,000 minus the $15,000 of salvage value we would depreciate divided by three years, and the straight line charge would be $295,000 for year of the three years.
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Option 2 is correct - There is a higher probability of experiencing Financial distress.</h3>
Firms with volatile operating income tend to have lower debt ratios because there is a higher probability of experiencing financial distress.
Financial distress is a condition in which a company or individual cannot generate sufficient revenues or income, making it unable to meet or pay its financial obligations. This is generally due to high fixed costs, a large degree of illiquid assets, or revenues sensitive to economic downturns.
Following reasons can lead to financial distress in a firm.
- Cash flows - The first sign that things are going wrong is a constant shortage of cash. The old adage that cash is king exists for a reason
- Falling margins and poor profits - Experienced entrepreneurs have learnt that for long-term survival what matters are profits, not only sales. Poor profits are usually the first indicators that a business is not doing well.
- Poor sales growth or decline in revenues - When there is no sales growth despite extreme marketing activities, this could indicate a lack of customer acceptance, which is key to any business success.
- Extended payment days - Another sign of possible trouble is a rise in either creditor or debtor payment days. If business has to delay payments to its creditors, this can force some suppliers to stop supplying
- Difficulty in raising capital - If a company is constantly borrowing and asking its investors to inject more capital, this is an underlying sign that it is increasingly finding it difficult to self-sustain.
Hence, Firms with volatile operating income tend to have lower debt ratios because there is a higher probability of experiencing financial distress.
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A perfectly competitive firm earns a profit when price is above the average total cost.
A perfect competitive firm is a firm that operates in a perfectly competitive market. A perfectly competitive market is a market where the goods and services exchanged are homogenous. There is perfect information in this type of market.
In the long run, firms in a perfect competition earn only a normal profit. If in the short run, firms are earning economic profit, new firms would enter into the market. This would wipe out economic profit. In the short run, if an economic loss is been made, firms would leave the industry.
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