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Why do firms enter an industry when they know that in the long run economic profit will be zero?
Firms enter an industry while they suppose to earn economic profit. These short-run profits are sufficient to encourage entry. Zero economic profits in the long run involve normal returns to the factors of production, as well as the labor and capital of the owners of firms. For instance, the owner of a small business might experience positive accounting profits before the foregone wages from running the business are subtracted from these profits. If the revenue minus another costs is just equivalent to what could be earned elsewhere after that the owner is indifferent to staying in business or exiting.
State about the Quick ratio or acid test Quick ratio = Current assets less inventories /Current liabilities(times) This ratio measures immediate solvency of a busin
Define why we measure a project’s risk as the change in the CV. We calculate a project’s risk as the change in the coefficient of variation since this focuses on the change in
what is logical process modelling? what is physical modelling?
The management of Nelson plc wish to estimate their firm’s equity beta. Nelson has had a stock market quotation for only two months and the financial management feels that it would
CAPITAL STRUCTURE DEFINITION According to Gerstenberg, Capital structure refers to 'the makeup of a firm's capitalisation'. In other way, it signifies the mix of different sou
Other than zero coupon bonds, all fixed income securities make periodic payments in the form of coupon interest. This coupon interest can be rei
"A" Round Financing "A" Round Financing is the first main round of business financing through private equity investors or venture capitalists. In private equity investing, an "
What are the disadvantages and advantages of Foreign direct investment (FDI) like opposed to a licensing agreement with a foreign partner? Answer: The major advantage of FDI (
complete the balance sheet and sales information using the following data: debt to assets ratio 50% current ratio 1.8x total assets turnover 1.5x day sales outstanding 36.5 days (c
B.J. Industries has a current ratio of 2.5, with $2.5 million in current assets. Due to sales growth, the company wants to expand accounts receivable and inventories by
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