Why would a company choose to factor itsreceivables, given that it will get less money than thereceivables are worth?
Q: What is capital rationing?
A:
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Q: Why should the managers make investment decisions on the basis of cashflows rather than profits?
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Q: Even if prices follow a random walk, they still may not be informationally efficient. Explain why…
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Q: What does a negative value for unlevered free cash flow imply for the claimants of a firm
A: Unlevered free cash flow for a company is that free cash flow which is determined and computed…
Q: Why we have to valuate the company?
A: Value of a business refers to the business value. It shows the worth of the business as on a…
Q: Why would a company decide to pay investors cash? What are the two ways to give cash back to…
A: Cash is paid in terms of dividends.
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Q: Can Retained Earnings grow too large? If so, what strategies might management take to reduce it
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Q: What can be said about a firm whose owners’ equity is a negative amount? How could such a situation…
A:
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Q: Is capital rationing always a bad thing? Explain
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A: Every company receives their capital in the form of equity or debt. Equity is from the shareholders…
Q: If the firm borrows money at a significantly lower rate, this factor affects the firm's MARR. How?
A: If the firm borrows money at a lower rate then, MARR will also be lower.
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A: The Market economy is an economy model in which all the decision regarding the demand and supply of…
Q: Why do companies don't distribute all their profit
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Q: How will a company view working capital – positive, negative, or a necessary evil?
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Q: How can a company’s operations generate a healthy profitand yet produce meager or even negative cash…
A:
Q: what is the first price the company setts the pen lo have marginally profitable? Knowing that
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Q: Explain how a company can be “profit rich, yet cash poor.”
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Q: Can you identify a possible explanation for the company’s declining profits? If so, what is it?
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Q: Why do larger financial intermediaries tend to have lower transaction costs? A. Diseconomies of…
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Q: false?
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A: Dollar-Cost Averaging: Dollar-Cost averaging is an investment approach that involves investing an…
Q: What major advantage does a company that has positive free cash flow have over a company that has…
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Q: If a company chooses to minimize WACC, what will be the effect on financial flexibility
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Q: Would a firm that has many good investment opportunities be likely to have ahigher or a lower…
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Q: What is free cash flow, and how does it work? If you were an investor, why could you be more…
A: When all operational costs and capital expenditures have been met, free cash flows represent the…
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Q: Why short selling are risky than buying margin?
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Q: What is causing the volatility for this company? Is anything in this statement unusual or concerning…
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Q: Why are the companies with low cash flow unable to bear the risk of a large project?
A: Cash flows are the inflow and outflow of cash and cash equivalents within an organization.A company…
Q: How can the company, which is a profitable one, have insufficient cash flows? Explain your answer.
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Q: Can a firm have income without also having a positive cash flow? Explain.
A: Cash Flows are the inflows & outflows of cash in the business to meet the day to day activities.…
Why would a company choose to factor its
receivables, given that it will get less money than the
receivables are worth?
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Solved in 2 steps
- What can you say about the market value of the company? is it positve or is negative?How can a company’s operations generate a healthy profitand yet produce meager or even negative cash flows?One of the indirect costs of financial distress is having to sell assets at lower than market value. Using examples explain what this is and how it could effect the value of a firm.
- Is it better to finance a company thru debt or thru equity? Why? What are the downside and upside to each?Why is a firm’s value maximized if it invests to the point where its marginal return onnew investment is equal to its marginal cost of capital?What is capital rationing, what conditions lead toit, and how should it be dealt with?
- What are the possible actions that a firm can take if it experiences a financial failure?In financial markets, if there is an untapped profit opportunity, arbitrageurs will realize it and it will disappear. What does the EMH hypothesis say about the consequences of these arbitrageurs on prices?A company's market value is generally less than its book value. True of Falses ?
- Even if prices follow a random walk, they still may not be informationally efficient. Explain why this may be true and why it matters for the efficient allocation of capital in our economy.Why is the total cost of bringing a general cash offer to the market lower than an IPOwhat is the reason why most companies prefer predictive value over confirmatory value?