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What is the operating leverage effect and what causes it? What are the potential benefits and negative consequences of high operating leverage?
The operating leverage effect is the fact whereby a small change in sales activates a relatively large change in operating income. It is happened by the presence of fixed operating costs. The potential paybacks are that if sales are rising operating income will rise more quickly. The negative penalties are that falling sales will happen operating income to fall more quickly including negative values.
Analytical way of viewing financial problems of a firm The new approach is an analytical way of viewing financial problems of a firm. The main contents of this tactic are what
Specific Cost of Capital When the Cost of every source of capital is individually calculated, it is known as Specific Cost of Capital example Cost of equity, cost of debt, etc
38. The optimum capital structure is the one with i) highest value of the firm ii) Lowest value of the firm iii) highest shares in numbers iv) highest debt
Discount Rate Determinants The discount rate is the firm weighted average cost of capital. It represents the opportunity cost of investing creditors and shareholders funds in o
discuss the applicability of operating cycles of vegetable growing
The director of capital budgeting for a firm has recognized two mutually exclusive projects, A and B, with the following expected net cash flows:
Q. Types of financial statement analysis? 1) External analysis This analysis is performed by external stakeholders like lenders, suppliers, investors, and governments. 2)
Bond Price is the purchase value of a bond. It can be priced either at a premium, discount or at par. It is important for the prospective buyer to know how to det
Compounding or Future Value Concept: - Under this process of compounding the future worth of all cash inflows at the end of the time horizon at a particular rate of interest are fo
What are the importance of leverage on a small scale firm?
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