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3 years ago

Give an example of financial leverage, define it and explain how financial leverage works

1 answer:

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Example: A company spends $5 million to buy prime real estate on which to build a new manufacturing factory. The land is worth $5 million. This is not financial leverage because the corporation is not using borrowed funds to purchase the land.
If the same corporation spent $2.5 million of its own money and $2.5 million in borrowed funds to purchase the same piece of real estate, the company is utilizing financial leverage.

Define: the utilization of fixed expenditures to increase the expected risk and potential return

Explanation: When purchasing assets, the corporation has three alternatives for financing: stock, debt, and leases. Apart from equity, the remaining choices have fixed costs that are lower than the expected income from the asset.

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Jaycee Jeans sold 40 pairs of jeans at a price of $40. When it lowered its price to $20, the quantity sold increased to 60 pairs

grigory [225]

Answer:

The answer is: A) 0.6

Explanation:

First we will calculate the midpoint for units:

change in units = 40 - 60 = -20
average units = (40 + 60) / 2 = 50
midpoint for units = 20 / 50 = 0.4 (we only use positive numbers)

Now we will calculate the midpoint for price:

change in price = 40 - 20 = 20
average price = (40 + 20) / 2 = 30
midpoint for units = 20 / 30 = 0.67

Finally we divide 0.4 / 0.67 = 0.6

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3 years ago

The following financial ratios and calculations were based on information from Kohl Co.'s financial statements for the current y

creativ13 [48]

Answer:

Kohl's Average total Assets were $1,000,000

Explanation:

Asset Turnover = Net Sales / Average fixed Assets

Net Sales = Asset Turnover x Average fixed Assets

Account Receivable Turnover = Net Sales / Average Account receivable

Net Sales = Account Receivable Turnover x Average Account receivable

According to given condition

Asset Turnover x Average fixed Assets = Account Receivable Turnover x Average Account receivable

2 X Average fixed Assets = 10 X $200,000

Average fixed Assets = $2000,000 / 2

Average fixed Assets = $1,000,000

7 0

3 years ago

Which fiduciary act requires that an agent act in good faith and obey the principal's directions as outlined in the contract?

omeli [17]

Answer

Obedience

Explanation:

Obedience is a behavior that is aware and aware of principles and laws. Guardians, instructors, and cops all acknowledge acquiescence. Individuals show obedience when they adhere to the law,

In the given question it is given that agent act in good faith and obey the principles direction this is a obedience fiduciary act because in this can everyone have to be obey to the principles.

7 0

3 years ago

As a system goes from state to state , its entropy decreases. What can you say about the number of microstates corresponding to

hram777 [196]

Answer:

B. A has more microstates than B.

Explanation:

Since on going from state A to state B the entropy is decreasing, that is the freedom of movement and the number of ways of arrangement is decreasing and thereby the number of microstates also decreases.

Therefore, A has more microstates than B.

4 0

3 years ago

Leslie's Unique Clothing Stores offers a common stock that pays an annual dividend of $3.10 a share. The company has promised to

Gre4nikov [31]

Answer:

The maximum that one should be willing to pay for this stock today is $21.38

Explanation:

The constant dividend paying company is the one whose dividend growth remains zero or unchanged. The zero growth model of the DDM is used to calculate the price or value of stock today of such a stock. This kind of stock is just like a perpetuity as it pays a fixed amount after fixed intervals of time forever.

The formula for price of such a stock or zero growth model is:

Price = Dividend / r

Price = 3.1 / 0.145

Price = $21.379 rounded off to $21.38

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3 years ago