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2 years ago

Why do people establish their own business?

Business

1 answer:

blagie [28]2 years ago

8 0

Answer:

financial freedom

Explanation:

the reasons people start their own business is usually because they desire financial freedom meaning they would like have more disposable resources for themselves.

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You are given the following information on Kaleb's Welding Supply: Profit margin 6.9 % Capital intensity ratio .78 Debt–equity r

Tatiana [17]

Answer:

0.1563946140 or 15.64%

Explanation:

The computation of the sustainable growth rate is shown below:

But before that we need to do the following calculations

As we know that

Profit margin = net income ÷ Sales

So,

0.069 = $86,000 ÷ Sales

Sales = $1,246,376.81159

Now

Capital intensity ratio = Total assets ÷ Sales

Total assets is

= $1,246,376.81159 × 0.78

= $972,173.91304

And,

Debt - Equity ratio = Debt ÷ Equity = 0.9

Now, if debt is 0.9, and equity is 1, Thereforetotal assets is 1.9 (0.9 + 1).

So,

Equity = Total assets x 1 ÷ 1.9

= $972,173.91304 ÷ 1.9

= $511,670.480547

And,

Return on Equity (ROE) = Net income ÷ Equity

= $86,000 ÷ $511,670.480547

= 0.16807692307 or 16.807692307%

And,

Dividend payout ratio = Dividend ÷ net income

= $16,800 ÷ $86,000

= 0.1953488372

Now

Retention ratio (b) = 1 - dividend payout

= 1 - 0.1953488372

= 0.8046511628

So,

Sustainable growth rate (SGR) = (ROE x b) ÷ [ 1 - (ROE × b) ]

= (0.16807692307% × 0.8046511628) ÷ [ 1 - (0.16807692307% × 0.8046511628) ]

= 0.1563946140 or 15.64%

6 0

3 years ago

A firm is considering the purchase of an asset whose risk is greater than the current risk of the firm, based on any method for

Anika [276]

Answer:

e) Increase the required rate of return used to evaluate the project to reflect the higher risk of the project

Explanation:

As per the basic concept of investment, "higher the risk, higher the return".

Thus, an investor assumes a higher risk only in the scenario wherein the expected return would be commensurate with such risk. Investor would only invest in a risky asset when the return derived can compensate him for the excess risk assumed.

Required rate of return is an investors expectation of return from a project also referred to as the cost of capital.

So for the purpose of evaluating the project, the investor should use a higher required rate of return to signify higher risk which would reveal the true viability of the project.

8 0

3 years ago

Limited government licenses that create a monopoly do so because the license generates a marginal cost advantage. the monopoly w

My name is Ann [436]

Limited government licences that create a monopoly do so because a barrier to enter the market exists.
Monopoly can be established by the government by a form of integration or form naturally, it can preserve excess profit because barriers to entry prevent competitors from entering the market.

5 0

3 years ago

Firm B, a calendar year, cash basis taxpayer, leases lawn and garden equipment. During December, it received the following cash

ira [324]

Answer:

a. $522 repayment of a loan from an employee. Firm B loaned $500 to the employee six months ago, and the employee repaid the loan with interest.

Firm B should recognize $22 as interest income.

b. $600 deposit from a customer who rented mechanical equipment. Firm B must return the entire deposit when the customer returns the undamaged equipment.

The deposit cannot be recognized as income since it is a liability.

c. $10,000 short-term loan from a local bank. Firm B gave the bank a written note to repay the loan in one year at 9 percent interest.

Interests ($900) will be recognized when they are actually paid for in 1 year. No accrued interests must be reported on the balance sheet (December 31).

d. $888 prepaid rent from the customer described in part b. The rent is $12 per day for the 74-day period from December 17 through February 28.

The $888 will be recognized as revenue during the current year.

Explanation:

When a taxpayer is a cash basis taxpayer, it will only report income and expenses that are actually collected or paid for respectively. All accounts receivable or accounts payable are not considered revenues nor expenses.

7 0

3 years ago

Forward Company makes all its sales on account. Forward's accounts receivable payment experience is as follows:

8090 [49]

Answer:

The expected cash receipts in the month of November are $160,600

Explanation:

Expected cash receipts in the month of November = 30% sales in the month of November + 65% sales in the month of October + 3% sales in the month of September.

Forward Company had sales in September of $120,000, in October of $140,000 , in November of $220,000

Expected cash receipts in the month of November = 30% x $220,000 + 65% x $140,000 + 3% x $120,000 = $66,000 + $91,000 + $3,600 = $160,600

4 0

3 years ago

Why do people establish their own business?​

Why do people establish their own business?