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How can managers be encouraged to act in shareholders best interest?
Managers can be encouraged to act in their shareholders best interest by linking their pay to the stock price. When they are motivated by compensation then they will do things to make the share price increase.
What is a share capital?
This is the sum of money the shareholders pay into which is called the share capital This is the sum of money the shareholders pay into which is called the share capital
How managers can be motivated to act in the shareholders' interest?
Profit sharing, the more money the manager makes, the more the shareholders make.
How are managers bonded to shareholders?
1. Shareholders determine the membership of the board of directors by voting. 2. Contracts with management and arrangements for compensation can be made so that management has an incentive to pursue shareholders' goals. 3. Fear of a takeover gives managers an incentive to take actions that will maximize stock prices 4. Competition in the managerial labour market may force managers to perform in the best interest of shareholders. Firm willing to pay the most will lure good managers.
What is the financial leverage multiplier?
The leverage multiplier equals to total asset dividing by shareholders' equity. The high leverage multiplier indicates that the firms decide to overcome the high levels of borrowing or debt on which it must pay interest. The higher ratio means higher liability than its shareholders' equity. Essentially, the ratio is mainly used to help firms making decision about how to raise funds by undertaking debts. A company will only undertake significant amounts of debt when it believes that return on assets (ROA) will be higher than the interest on the loan.
How can managers be encouraged to act in shareholders best interest?
Managers can be encouraged to act in their shareholders best interest by linking their pay to the stock price. When they are motivated by compensation then they will do things to make the share price increase.
Residual Interest in a corporation belongs to?
The shareholders.
What is a share capital?
This is the sum of money the shareholders pay into which is called the share capital This is the sum of money the shareholders pay into which is called the share capital
How managers can be motivated to act in the shareholders' interest?
Profit sharing, the more money the manager makes, the more the shareholders make.
What is financial gearing?
It is the relationship between shareholders equity and fixed interest debt.
On what basis are mutual funds taxed?
shareholders are taxed on the distribution of fund's income. For tax purpose, mutual funds distribute their net income to the shareholders in two ways: (1) dividend and interest payments and (2) realized capital gains.
What is it called when Shareholders do not have to pay the debts of the corporation?
limited liability
How is interest coverage used?
Interest coverages is basically a person or company's ability to pay back a loan and the interest on it. Interest coverage is used to see if a person or company is a good risk for a loan.
How are managers bonded to shareholders?
1. Shareholders determine the membership of the board of directors by voting. 2. Contracts with management and arrangements for compensation can be made so that management has an incentive to pursue shareholders' goals. 3. Fear of a takeover gives managers an incentive to take actions that will maximize stock prices 4. Competition in the managerial labour market may force managers to perform in the best interest of shareholders. Firm willing to pay the most will lure good managers.
Will managers always make decisions that will be in the best interests of shareholders?
No. Their pay arrangement can give you a good indication as to how well they will act on the shareholders' behalf.
How much interest do you have to pay on used car loans?
On a used car loan, you will generally have to pay between 4 and 10 % interest on your loan. Of course that depends on which lender will finance you, the age and condition of the used car, and of course your credit rating.
What is the financial leverage multiplier?
The leverage multiplier equals to total asset dividing by shareholders' equity. The high leverage multiplier indicates that the firms decide to overcome the high levels of borrowing or debt on which it must pay interest. The higher ratio means higher liability than its shareholders' equity. Essentially, the ratio is mainly used to help firms making decision about how to raise funds by undertaking debts. A company will only undertake significant amounts of debt when it believes that return on assets (ROA) will be higher than the interest on the loan.
