Equity investment
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The document defines and provides examples of four types of companies: 1) Growth companies reinvest most profits into expanding their business and experience significantly increasing cash flows and earnings. Google is provided as an example. 2) Defensive companies have stable sales and earnings during economic fluctuations. Utilities companies are given as examples. 3) Cyclical companies' revenues fluctuate with the business cycle, being higher in good economic times and lower in bad times. The airline industry is provided as a cyclical example. 4) Speculative companies invest significantly in uncertain projects that could fail or provide large returns if successful. Energy exploration companies are provided as engaging in speculative activities.
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The memo warns that a U.S. recession is likely as concerns about the stock market and economy have risen dramatically. It recommends shifting to a market neutral strategy as equity values will remain depressed for an extended period. Several indicators point to worsening economic conditions, such as banks entering risk aversion mode, high yield bonds becoming illiquid, weaker auto and revenue growth sales, impacts from low oil prices yet to be fully realized, and declining freight volumes. Caution is advised given these rising concerns about a potential recession.
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This document provides an overview of different forms of private equity funding. It discusses why companies need funds and when equity financing is preferred over debt. It then describes various forms of private equity including angel investors, venture capital, growth-stage private equity, buyout funds, and mezzanine debt. The document reviews recent trends in private equity deals and sectors. It also outlines the general private equity investment process, valuation methods, deal structures, exit options, and considerations for private equity funding. In the conclusion, it notes that private equity is operating in a challenging environment with a large pipeline of future exits.
Report on Partnership (General Discussion)
Report on Partnership presented By Nilda Vicente and Marian Alumbro
Copyright laws applicable
For question and permissions to use the presentation
email marianjanealumbro@yahoo.com
just inform us of your name, your school and purpose..thanks!
Corporations Code of the Philippines Ateneo Reviewer
This document provides an overview of corporation law in the Philippines. It defines a corporation and lists its key attributes, such as being an artificial being created by law. The document outlines the various classes of corporations and their distinguishing features. It also describes the process of incorporating a business, including the promotional stage, filing articles of incorporation, and organizational requirements. The summary provides a high-level look at important corporation law concepts in the Philippines.
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Business Law, Law of partnership
The document discusses the law of partnership in Pakistan. It defines a partnership as a voluntary association of two or more people who contribute money, property, or skills to carry on a lawful business and share profits and losses. The key characteristics of a partnership include no separate legal entity, agreement between partners, a minimum of two partners, engagement in business, profit sharing, unlimited liability, capital contributions, duties of good faith, management involvement, transferability of interests, and duration. The document also discusses types of partnerships like partnership-at-will and particular partnerships.
568ChapterInvestmentsAfter studying this chapter, yo.docx
568
Chapter
Investments
After studying this chapter, you should be
able to:
1 Discuss why corporations invest in debt
and stock securities.
2 Explain the accounting for debt
investments.
3 Explain the accounting for stock
investments.
4 Describe the use of consolidated
financial statements.
5 Indicate how debt and stock
investments are reported in financial
statements.
6 Distinguish between short-term and
long-term investments.
S T U D Y O B J E C T I V E S
Feature Story
The Navigator✓
12
“IS THERE ANYTHING ELSE WE CAN BUY?”
In a rapidly changing world you must change rapidly or suffer the conse-
quences. In business, change requires investment.
A case in point is found in the entertainment industry. Technology is bring-
ing about innovations so quickly that it is nearly impossible to guess which
technologies will last and which will soon fade away. For example, will both
satellite TV and cable TV survive, or will just one succeed, or will both be
replaced by something else? Or consider the publishing industry. Will paper
newspapers and magazines be replaced by online news via the World Wide
Web? If you are a publisher, you have to make your best guess about what
the future holds and invest accordingly.
Time Warner, Inc. (www.timewarner.com) lives at the center of this arena. It is
not an environment for the timid, and Time Warner’s philosophy is anything
Scan Study Objectives ■
Read Feature Story ■
Read Preview ■
Read text and answer
p. 573 ■ p. 578 ■ p. 581 ■ p. 584 ■
Work Comprehensive p. 587 ■
Review Summary of Study Objectives ■
Answer Self-Study Questions ■
Complete Assignments ■
The Navigator✓
Do it!
Do it!
JWCL165_c12_568-611.qxd 8/12/09 8:29 AM Page 568
569
but that. It might be character-
ized as, “If we can’t beat you,
we will buy you.” Its mantra is
“invest, invest, invest.” A list of
Time Warner’s holdings gives
an idea of its reach. Magazines:
People, Time, Life, Sports Illus-
trated, and Fortune. Book pub-
lishers: Time-Life Books, Book-
of-the-Month Club, Little, Brown & Co, and Sunset Books. Television and
movies: Warner Bros. (“ER,” “Without a Trace,” the WB Network), HBO, and
movies like Harry Potter and the Goblet of Fire, and Batman Begins. Broad-
casting: TNT, CNN news, and Turner’s library of thousands of classic movies.
Internet: America Online and AOL Anywhere. Time Warner owns more infor-
mation and entertainment copyrights and brands than any other company in
the world.
The merger of America Online (AOL) with Time Warner, one of the biggest
mergers ever, was originally perceived by many as the gateway to the
future. In actuality, it was a financial disaster. It is largely responsible for
much of the decline in Time Warner’s stock price, from a high of $95.80 to
a recent level of $14.07. Ted Turner, who was at one time Time Warner’s
largest shareholder, lost billions of dollars on the deal and eventually sold
most of his shares.
The Navigator✓
Inside Chapter 12…
• Ho.
AS Macro Key Term Glossary
The document provides definitions for various macroeconomic key terms:
- AAA credit rating refers to the best credit rating given to bonds, indicating negligible risk of default.
- Aggregate supply shocks reduce output and can increase inflation by affecting potential output or causing inflation.
- Austerity aims to reduce government deficits through tax increases and/or spending cuts.
- Bank runs occur when depositors lose confidence and withdraw funds due to fears the bank may collapse.
- Bond markets allow governments and firms to raise money through issuing new debt.
- The BRIC economies refer to the rising emerging markets of Brazil, Russia, India, and China.
- Bubbles occur when asset prices
Recommended
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The memo warns that a U.S. recession is likely as concerns about the stock market and economy have risen dramatically. It recommends shifting to a market neutral strategy as equity values will remain depressed for an extended period. Several indicators point to worsening economic conditions, such as banks entering risk aversion mode, high yield bonds becoming illiquid, weaker auto and revenue growth sales, impacts from low oil prices yet to be fully realized, and declining freight volumes. Caution is advised given these rising concerns about a potential recession.
Private Equity Funding
This document provides an overview of different forms of private equity funding. It discusses why companies need funds and when equity financing is preferred over debt. It then describes various forms of private equity including angel investors, venture capital, growth-stage private equity, buyout funds, and mezzanine debt. The document reviews recent trends in private equity deals and sectors. It also outlines the general private equity investment process, valuation methods, deal structures, exit options, and considerations for private equity funding. In the conclusion, it notes that private equity is operating in a challenging environment with a large pipeline of future exits.
Report on Partnership (General Discussion)
Report on Partnership presented By Nilda Vicente and Marian Alumbro
Copyright laws applicable
For question and permissions to use the presentation
email marianjanealumbro@yahoo.com
just inform us of your name, your school and purpose..thanks!
Corporations Code of the Philippines Ateneo Reviewer
This document provides an overview of corporation law in the Philippines. It defines a corporation and lists its key attributes, such as being an artificial being created by law. The document outlines the various classes of corporations and their distinguishing features. It also describes the process of incorporating a business, including the promotional stage, filing articles of incorporation, and organizational requirements. The summary provides a high-level look at important corporation law concepts in the Philippines.
Successful Joint Ventures
Building successful joint ventures requires careful planning and execution during the launch phase. Common mistakes include lack of commitment of resources, strategic conflicts between partners, and missed operational synergies. Key challenges are creating strategic alignment between partners, establishing an effective joint governance system, managing economic interdependencies, building a high-performing organization, and putting together a capable management team. Attention to details like goals, resources, controls, and communication are critical to address these challenges and get the joint venture off to a strong start.
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The document discusses the law of partnership in Pakistan. It defines a partnership as a voluntary association of two or more people who contribute money, property, or skills to carry on a lawful business and share profits and losses. The key characteristics of a partnership include no separate legal entity, agreement between partners, a minimum of two partners, engagement in business, profit sharing, unlimited liability, capital contributions, duties of good faith, management involvement, transferability of interests, and duration. The document also discusses types of partnerships like partnership-at-will and particular partnerships.
568ChapterInvestmentsAfter studying this chapter, yo.docx
568
Chapter
Investments
After studying this chapter, you should be
able to:
1 Discuss why corporations invest in debt
and stock securities.
2 Explain the accounting for debt
investments.
3 Explain the accounting for stock
investments.
4 Describe the use of consolidated
financial statements.
5 Indicate how debt and stock
investments are reported in financial
statements.
6 Distinguish between short-term and
long-term investments.
S T U D Y O B J E C T I V E S
Feature Story
The Navigator✓
12
“IS THERE ANYTHING ELSE WE CAN BUY?”
In a rapidly changing world you must change rapidly or suffer the conse-
quences. In business, change requires investment.
A case in point is found in the entertainment industry. Technology is bring-
ing about innovations so quickly that it is nearly impossible to guess which
technologies will last and which will soon fade away. For example, will both
satellite TV and cable TV survive, or will just one succeed, or will both be
replaced by something else? Or consider the publishing industry. Will paper
newspapers and magazines be replaced by online news via the World Wide
Web? If you are a publisher, you have to make your best guess about what
the future holds and invest accordingly.
Time Warner, Inc. (www.timewarner.com) lives at the center of this arena. It is
not an environment for the timid, and Time Warner’s philosophy is anything
Scan Study Objectives ■
Read Feature Story ■
Read Preview ■
Read text and answer
p. 573 ■ p. 578 ■ p. 581 ■ p. 584 ■
Work Comprehensive p. 587 ■
Review Summary of Study Objectives ■
Answer Self-Study Questions ■
Complete Assignments ■
The Navigator✓
Do it!
Do it!
JWCL165_c12_568-611.qxd 8/12/09 8:29 AM Page 568
569
but that. It might be character-
ized as, “If we can’t beat you,
we will buy you.” Its mantra is
“invest, invest, invest.” A list of
Time Warner’s holdings gives
an idea of its reach. Magazines:
People, Time, Life, Sports Illus-
trated, and Fortune. Book pub-
lishers: Time-Life Books, Book-
of-the-Month Club, Little, Brown & Co, and Sunset Books. Television and
movies: Warner Bros. (“ER,” “Without a Trace,” the WB Network), HBO, and
movies like Harry Potter and the Goblet of Fire, and Batman Begins. Broad-
casting: TNT, CNN news, and Turner’s library of thousands of classic movies.
Internet: America Online and AOL Anywhere. Time Warner owns more infor-
mation and entertainment copyrights and brands than any other company in
the world.
The merger of America Online (AOL) with Time Warner, one of the biggest
mergers ever, was originally perceived by many as the gateway to the
future. In actuality, it was a financial disaster. It is largely responsible for
much of the decline in Time Warner’s stock price, from a high of $95.80 to
a recent level of $14.07. Ted Turner, who was at one time Time Warner’s
largest shareholder, lost billions of dollars on the deal and eventually sold
most of his shares.
The Navigator✓
Inside Chapter 12…
• Ho.
AS Macro Key Term Glossary
The document provides definitions for various macroeconomic key terms:
- AAA credit rating refers to the best credit rating given to bonds, indicating negligible risk of default.
- Aggregate supply shocks reduce output and can increase inflation by affecting potential output or causing inflation.
- Austerity aims to reduce government deficits through tax increases and/or spending cuts.
- Bank runs occur when depositors lose confidence and withdraw funds due to fears the bank may collapse.
- Bond markets allow governments and firms to raise money through issuing new debt.
- The BRIC economies refer to the rising emerging markets of Brazil, Russia, India, and China.
- Bubbles occur when asset prices
Economies and Diseconomies of scale
include meaning, takeaway, sources, advantages and disadvantages of economies and diseconomies of scale.
Key Term Glossary for AS Macro (2015)
This document defines key economic terms used in macroeconomics. It provides definitions for terms like AAA credit rating (the best credit rating indicating negligible risk of default), accelerator effect (planned investment is positively linked to past and expected consumer demand growth), and aggregate supply shock (an inflation or potential output shock that reduces output and can increase inflation). In total, it defines over 30 important macroeconomic concepts.
what are some barriers a company might need to overcome when enterin.pdf
what are some barriers a company might need to overcome when entering the global market?
and
what are some sources of financing for a new business? Limit your post to one source, and
include some pros and cons.
Solution
Barriers to entry into markets for firms include:
· Advertising - Incumbent firms can seek to make it difficult for new competitors by spending
heavily on advertising that new firms would find more difficult to afford. This is known as the
market power theory of advertising. Here, established firms\' use of advertising creates a
consumer perceived difference in its brand from other brands to a degree that consumers see its
brand as a slightly different product. Since the brand is seen as a slightly different product,
products from existing or potential competitors cannot be perfectly substituted in place of the
established firm\'s brand. This makes it hard for new competitors to gain consumer acceptance.
· Capital - need the capital to start up such as equipment, building, and raw materials
· Control of resources - If a single firm has control of a resource essential for a certain industry,
and then other firms are unable to compete in the industry.
· Cost advantages independent of scale - Proprietary technology, know-how, favorable access to
raw materials, favorable geographic locations, learning curve cost advantages.
· Customer loyalty - Large incumbent firms may have existing customers loyal to established
products. The presence of established strong brands within a market can be a barrier to entry in
this case.
· Distributor agreements - Exclusive agreements with key distributors or retailers can make it
difficult for other manufacturers to enter the industry. · Economy of scale - The increase in
efficiency of production as the number of goods being produced increases. Cost advantages can
sometimes be quickly reversed by advances in technology. For example, the development of
personal computers has allowed small companies to make use of database and communications
technology which was once extremely expensive and only available to large corporations.
· Government regulations - A rule of order having the force of law, prescribed by a superior or
competent authority, relating to the actions of those under the authority\'s control. Requirements
for licenses and permits may raise the investment needed to enter a market, creating an effective
barrier to entry.
· Inelastic demand - One strategy to penetrate a market is to sell at a lower price than the
incumbents. This is ineffective with price-insensitive consumers.
· Intellectual property - Potential entrant requires access to equally efficient production
technology as the combatant monopolist in order to freely enter a market. Patents give a firm the
legal right to stop other firms producing a product for a given period of time, and so restrict entry
into a market. Patents are intended to encourage invention and technological progress by
guaranteeing proceeds as an incentive.
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Flop fire loss of profit insurance
This document discusses consequential loss or business interruption insurance policies. It begins by explaining the client needs and objectives in obtaining such insurance, such as protecting against reductions in turnover, profit, and cash flow due to insured perils damaging property and interrupting business operations. It then covers topics like policy types, what is and isn't covered, how claims are calculated, factors considered in underwriting and rating premiums, definitions of key terms, and clauses commonly found in policies. Examples are provided throughout to illustrate concepts like calculating sums insured, premiums, and claims amounts.
05 type of stock
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
13Producer Choices andConstraints.docx
*
13
Producer Choices and
Constraints
Notes and teaching tips: 8, 16, 19, 37, 40, 44 and 66.
To view a full-screen figure during a class, click the red “expand” button.
To return to the previous slide, click the red “shrink” button.
To advance to the next slide, click anywhere on the full screen figure.
*
After studying this chapter, you will be able to
Explain the firm’s economic problem and function
Explain the relationship between a firm’s output and its inputs in the short run
Derive and explain a firm’s short-run cost curves
Explain the relationship between a firm’s output and costs in the long run and derive a firm’s long-run average cost curve
*
© 2013 Pearson Australia
What do a big electricity supplier, Origin Energy, and Sam’s T-Shirts, a small (fictional) producer, have in common?
Like every firm, They must decide how much to produce. How many people to employ. How much and what type of capital equipment to use.
How do firms make these decisions?
*
© 2013 Pearson Australia
A firm is an institution that hires factors of production and organises them to produce and sell goods and services.
The Firm’s Goal
A firm’s goal is to maximise profit.
If the firm fails to maximise its profit, the firm is either eliminated or taken over by another firm that seeks to maximise profit.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
Accounting Profit
Accountants measure a firm’s profit to ensure that the firm pays the correct amount of tax and to show its investors how their funds are being used.
Profit equals total revenue minus total cost.
Accountants use rules based on standards established by the accounting profession.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
Economic Accounting
Economists measure a firm’s profit to enable them to predict the firm’s decisions, and the goal of these decisions is to maximise economic profit.
Economic profit is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
A Firm’s Opportunity Cost of Production
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A firm’s opportunity cost of production is the sum of the cost of using resources
Bought in the market
Owned by the firm
Supplied by the firm's owner
The Firm and Its Economic Problem
*
Another day; another dollar profit—or 15 cents, after implicit costs. Emphasise the difference between accounting profit and economic profit when a firm owner is using cost information to make business decisions. Point out that only economic profit reflects the full opportunity cost of making a business decision and it is vital for assessing the true financial health of a firm. Stress that accountants are limited in their ability to interpret and report the costs of production: All accounting costs must ei.
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This document discusses firms and their classification, growth, and economics of scale. It begins by classifying firms by industry, sector, ownership, and size. Small firms exist for several reasons like market size, consumer preferences, and flexibility. Firms can grow internally or externally through mergers. Mergers can be horizontal, vertical, or conglomerate, and are often done to achieve rationalization. Economics of scale refer to lower costs from increased production, while diseconomies refer to higher costs. Both internal and external scales can impact firms and industries.
Business Viability
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But the ones who show resilience and patience are the ones who can overcome with flying colours.
In the same way, as the economy goes through numerous ups and downs so does some companies and sectors. These companies who move in tandem to business cycles (expansion or recession) are termed as cyclical stocks.
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A joint venture is when two or more companies collaborate on a business project for a set period of time. It allows companies to share resources and expertise to solve problems and achieve goals. Some advantages include entering new markets, accessing increased resources, and reducing risk. However, setting up joint ventures can be time consuming and differences in company cultures may cause issues. Successful examples include Volvo-Eicher and Tata-Docomo, while failed ones are Chrysler-Diamler and Yamaha-Escorts.
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This document provides an overview of the electrical equipment industry and BHEL. The global electrical equipment industry is fragmented but dominated by a few large players. It manufactures products like motors, lighting, HVAC systems, and power equipment. Emerging markets have provided growth opportunities. BHEL is a large Indian public sector company and a dominant player in the domestic power and energy sectors. It has major manufacturing facilities across India and produces boilers, turbines, generators, and other equipment. The company faces competition from other global players but has a strong position in India.
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Profiles of Iconic Fashion Personalities.pdf
The fashion industry is dynamic and ever-changing, continuously sculpted by trailblazing visionaries who challenge norms and redefine beauty. This document delves into the profiles of some of the most iconic fashion personalities whose impact has left a lasting impression on the industry. From timeless designers to modern-day influencers, each individual has uniquely woven their thread into the rich fabric of fashion history, contributing to its ongoing evolution.
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Similar to Equity investment
Economies and Diseconomies of scale
include meaning, takeaway, sources, advantages and disadvantages of economies and diseconomies of scale.
Key Term Glossary for AS Macro (2015)
This document defines key economic terms used in macroeconomics. It provides definitions for terms like AAA credit rating (the best credit rating indicating negligible risk of default), accelerator effect (planned investment is positively linked to past and expected consumer demand growth), and aggregate supply shock (an inflation or potential output shock that reduces output and can increase inflation). In total, it defines over 30 important macroeconomic concepts.
what are some barriers a company might need to overcome when enterin.pdf
what are some barriers a company might need to overcome when entering the global market?
and
what are some sources of financing for a new business? Limit your post to one source, and
include some pros and cons.
Solution
Barriers to entry into markets for firms include:
· Advertising - Incumbent firms can seek to make it difficult for new competitors by spending
heavily on advertising that new firms would find more difficult to afford. This is known as the
market power theory of advertising. Here, established firms\' use of advertising creates a
consumer perceived difference in its brand from other brands to a degree that consumers see its
brand as a slightly different product. Since the brand is seen as a slightly different product,
products from existing or potential competitors cannot be perfectly substituted in place of the
established firm\'s brand. This makes it hard for new competitors to gain consumer acceptance.
· Capital - need the capital to start up such as equipment, building, and raw materials
· Control of resources - If a single firm has control of a resource essential for a certain industry,
and then other firms are unable to compete in the industry.
· Cost advantages independent of scale - Proprietary technology, know-how, favorable access to
raw materials, favorable geographic locations, learning curve cost advantages.
· Customer loyalty - Large incumbent firms may have existing customers loyal to established
products. The presence of established strong brands within a market can be a barrier to entry in
this case.
· Distributor agreements - Exclusive agreements with key distributors or retailers can make it
difficult for other manufacturers to enter the industry. · Economy of scale - The increase in
efficiency of production as the number of goods being produced increases. Cost advantages can
sometimes be quickly reversed by advances in technology. For example, the development of
personal computers has allowed small companies to make use of database and communications
technology which was once extremely expensive and only available to large corporations.
· Government regulations - A rule of order having the force of law, prescribed by a superior or
competent authority, relating to the actions of those under the authority\'s control. Requirements
for licenses and permits may raise the investment needed to enter a market, creating an effective
barrier to entry.
· Inelastic demand - One strategy to penetrate a market is to sell at a lower price than the
incumbents. This is ineffective with price-insensitive consumers.
· Intellectual property - Potential entrant requires access to equally efficient production
technology as the combatant monopolist in order to freely enter a market. Patents give a firm the
legal right to stop other firms producing a product for a given period of time, and so restrict entry
into a market. Patents are intended to encourage invention and technological progress by
guaranteeing proceeds as an incentive.
Buisness Income Insurance
This document is a special issue of Adjusting Today that provides answers to frequently asked questions about business income insurance. It contains answers to 6 questions on topics such as adjusting retail claims, handling claims when a business is losing money, insuring new subsidiaries, protecting against supplier or customer disruptions, anticipating proper insurance limits during inflation, and ensuring adequate civil authority coverage. The goal is to further educate on this complex but important type of insurance coverage.
Cf report rbs
The document discusses mergers and acquisitions (M&A). It describes how M&A can create synergies that allow combined companies to have enhanced cost efficiencies, such as staff reductions, economies of scale in purchasing, acquiring new technologies, and improved market reach. It also categorizes different types of mergers like horizontal, vertical, market-extension, and product-extension. The document then discusses leveraged buyouts and common buyout scenarios like the repackaging plan, split-up, portfolio plan, and savior plan. Finally, it outlines the history of M&A in five waves from the late 1800s to the present.
Flop fire loss of profit insurance
This document discusses consequential loss or business interruption insurance policies. It begins by explaining the client needs and objectives in obtaining such insurance, such as protecting against reductions in turnover, profit, and cash flow due to insured perils damaging property and interrupting business operations. It then covers topics like policy types, what is and isn't covered, how claims are calculated, factors considered in underwriting and rating premiums, definitions of key terms, and clauses commonly found in policies. Examples are provided throughout to illustrate concepts like calculating sums insured, premiums, and claims amounts.
05 type of stock
noorulhadi Lecturer at Govt College of Management Sciences, noorulhadi99@yahoo.com
i have prepared these slides and still using in mylectures, Reference: Portfolio management by S kevin and onlin
13Producer Choices andConstraints.docx
*
13
Producer Choices and
Constraints
Notes and teaching tips: 8, 16, 19, 37, 40, 44 and 66.
To view a full-screen figure during a class, click the red “expand” button.
To return to the previous slide, click the red “shrink” button.
To advance to the next slide, click anywhere on the full screen figure.
*
After studying this chapter, you will be able to
Explain the firm’s economic problem and function
Explain the relationship between a firm’s output and its inputs in the short run
Derive and explain a firm’s short-run cost curves
Explain the relationship between a firm’s output and costs in the long run and derive a firm’s long-run average cost curve
*
© 2013 Pearson Australia
What do a big electricity supplier, Origin Energy, and Sam’s T-Shirts, a small (fictional) producer, have in common?
Like every firm, They must decide how much to produce. How many people to employ. How much and what type of capital equipment to use.
How do firms make these decisions?
*
© 2013 Pearson Australia
A firm is an institution that hires factors of production and organises them to produce and sell goods and services.
The Firm’s Goal
A firm’s goal is to maximise profit.
If the firm fails to maximise its profit, the firm is either eliminated or taken over by another firm that seeks to maximise profit.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
Accounting Profit
Accountants measure a firm’s profit to ensure that the firm pays the correct amount of tax and to show its investors how their funds are being used.
Profit equals total revenue minus total cost.
Accountants use rules based on standards established by the accounting profession.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
Economic Accounting
Economists measure a firm’s profit to enable them to predict the firm’s decisions, and the goal of these decisions is to maximise economic profit.
Economic profit is equal to total revenue minus total cost, with total cost measured as the opportunity cost of production.
The Firm and Its Economic Problem
*
© 2013 Pearson Australia
A Firm’s Opportunity Cost of Production
A firm’s opportunity cost of production is the value of the best alternative use of the resources that a firm uses in production.
A firm’s opportunity cost of production is the sum of the cost of using resources
Bought in the market
Owned by the firm
Supplied by the firm's owner
The Firm and Its Economic Problem
*
Another day; another dollar profit—or 15 cents, after implicit costs. Emphasise the difference between accounting profit and economic profit when a firm owner is using cost information to make business decisions. Point out that only economic profit reflects the full opportunity cost of making a business decision and it is vital for assessing the true financial health of a firm. Stress that accountants are limited in their ability to interpret and report the costs of production: All accounting costs must ei.
Chapter 20 Firms in IGCSE economics presentation
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As individual we all experience ups and downs in our personal and professional life. Sometimes even an emotional roller coaster ride that you can't quite imagine.
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Standard Grade Business Management - Business Growth
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NPT A&M lecture 1
- Acquisitions and restructuring were popular corporate strategies in the 20th century, with over 55,000 acquisitions worth $1.3 trillion occurring in the 1980s alone.
- Restructuring refers to reorganizing a company through various actions like mergers and acquisitions, downsizing, outsourcing, and relocating operations. It aims to help companies adapt to changes in the global economy and new technologies.
- When a company struggles to pay its debts, it may undergo a debt restructuring to consolidate and adjust payment terms to make debt obligations more manageable and increase the likelihood of repaying bondholders. Bankruptcy is the result when restructuring efforts fail.
Growth Strategies.pptx
A joint venture is when two or more companies collaborate on a business project for a set period of time. It allows companies to share resources and expertise to solve problems and achieve goals. Some advantages include entering new markets, accessing increased resources, and reducing risk. However, setting up joint ventures can be time consuming and differences in company cultures may cause issues. Successful examples include Volvo-Eicher and Tata-Docomo, while failed ones are Chrysler-Diamler and Yamaha-Escorts.
Management of risk in financial services
All important topic will cover in this ppt . Like stock exchange, mutual funds insurance, merchant banking services etc
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Equity investment
- 1. EQUITY INVESTMENT Analyzing a Company
- 2. GROWTH COMPANY Any firm whose business generates significant positive cash flows or earnings, which increase at significantly faster rates than the overall economy. A growth company tends to have very profitable reinvestment opportunities for its own retained earnings. Thus, it typically pays little to no dividends to stockholders, opting instead to plow most or all of its profits back into its expanding business. • Growth companies are most often seen in the technology industries. The quintessential example of a growth company is Google, which has grown revenues, cash flows and earnings by leaps and bounds since its initial public offering.
- 3. DEFENSIVE COMPANY A corporation whose sales and earnings remain relatively stable during both economic upturns and downturns. Defensive companies may lag behind other companies during periods of economic expansion due to the relative stability of the demand for its products and services. While the demand for some goods and services tends to decrease dramatically during periods of economic instability or turmoil, the demand for the goods and services provided by defensive companies tends to remain stable. • Companies within the utilities industry, such as water and electricity corporations, are examples of defensive companies because the demand for these goods and services does not soften along with a declining economy. Other companies include those involved in the manufacturing or distribution of food, tobacco and oil.
- 4. CYCLICAL COMPANY A type of an industry that is sensitive to the business cycle, such that revenues are generally higher in periods of economic prosperity and expansion, and lower in periods of economic downturn and contraction. Companies in cyclical industries can deal with this type of volatility by implementing cuts to compensations and layoffs during bad times, and paying bonuses and hiring en masse in good times. Cyclical industries include those that produce durable goods such as raw materials and heavy equipment. • For example, the airline industry is a fairly cyclical industry; in good economic times, people have more disposable income and, therefore, they are more willing to take vacations and make use of air travel. Conversely, during bad economic times, people are much more cautious about spending. As a result, they tend to take more conservative vacations closer to home (if they go at all) and avoid expensive air travel.
- 5. SPECULATIVE COMPANY A company with a significant percentage of its assets tied up in projects with uncertain returns. A speculative company participates in projects with high probability of failure. However, should a project succeed, the returns can be very large. The stock of speculative companies is not necessarily classified as speculative stock, however, since the expected return of an established speculative company's stock (such as Exxon Mobil Corp or Shell Canada) can be reasonably estimated. • Energy companies are an example of a speculative company, since they are continuously committing a significant percentage of their assets to exploration projects. These companies often experience many failures before a project succeeds. However, should they find a new source of oil or natural gas, the potential returns are huge.