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Why should managers not focus on the current stock value as doing so will lead to over emphasis on short term profits at the expense of long term profits?
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Why shouldn't managers focus on the current stock value?
Managers should not focus on the current stock value because the value fluctuates daily based on market conditions, profits, management, and current economy. Managers should instead focus on the long term growth of the company.
Why conflict can happen between stakeholder?
Stakeholders are customers, competitors, society, government, managers, workers, shareholders... These stakeholders have different objectives: Shareholders want more profits but managers want the business to expand so as to receive more salary and increase their status. In this case, if managers decide to expand the business, the shareholders will receive less dividend since the money is used for the expansion, thus there is a conflict.. Customers want a better quality of products and a cheaper price. Society wants businesses to use environmentally friendly materials. Workers want a secure job and maybe a high pay...
What are the forces that causes the managers to act in the interest of the shareholders?
There are many forces which will tend to create a convergence between the interests of stockholders and managers, and thus cause managers to be interested in maximizing a corporation's profits or value: a. Competitive pressures could lead to stock price declines for nonperforming company, and again result in take overs, proxy contest, etc. b. In many corporations, management remunerations are tied to the performance and managers frequently are awarded stock options which gain value as the price of shares rises. Thus, managers will have an interest in maximizing stockholder welfare. c. Corporate shares are not only owned by widely dispersed stockholders but by large institutional holders such as: banks, insurance companies, mutual funds, pension funds, etc. These organizations employ analysts who continually study stock performance. Nonperforming companies would be sold from these institutions' portfolios, and lead to decreased prices of these stocks. This could lead to the dismissal of present management.
What is the primary objective of business management?
Maximizing profits.
What is the primary goal of office management?
To efficiently manage employees in order to maximise profits.
What is the importance of profits?
Profits - Expense = Savings and Investment Profits keep a business going as long is it is more than expense.
Why shouldn't managers focus on the current stock value?
Managers should not focus on the current stock value because the value fluctuates daily based on market conditions, profits, management, and current economy. Managers should instead focus on the long term growth of the company.
Why elasticity concept is required by managers?
Elasticity helps to find optimal production quantities and thus optimal profits.
Fixed assets reduces profits in balance sheet?
depreciation of fixed assets reduces the profit as depreciation is also an expense.
The term used to describe the excess of gross profit over direct expense is?
The term used to describe the excess of gross profit over direct expense is gross margin. This is the percentage by which the profits exceedÊthe production costs.Ê
Are dividends paid out of the current year's profits or from retained earnings?
From retained earnings.
Diffrentiate bitween the old and new concept of marketing?
old concept emphasis was on its profits while newer one see public benefits too
Should the aspect of expense and time be considered in creativity projects?
If one wishes to make money doing creative projects, then time and expense should be considered. Operating a craft business is just like operating any other business when it comes to calculation of profits and pricing.
What is the difference between drawing account and expense account?
A Drawing account is used for withdrawals by owners of the entity. This is commonly used in sole proprietoships and partnerships. The withdrawals are the distribution of the profits to the owners. In corporations dividends declared reduce retained earnings in a similar manner because dividends are distributions of profits to the stockholders. An expense account is used for costs incurred by the entity such as salaries, depreciation, rent, interest, insurance, advertising, and taxes.
What is doubtful debt provision?
An item on the balance sheet that falls under liabilities. A provision is "raised" when the company has an expense for which it has not yet received an invoice and therefore does not know the amount. The provision is an estimate, which is charged against profits because the expense was incurred in the accounting period, which is being reported
What is provision for doubtful debt?
An item on the balance sheet that falls under liabilities. A provision is "raised" when the company has an expense for which it has not yet received an invoice and therefore does not know the amount. The provision is an estimate, which is charged against profits because the expense was incurred in the accounting period, which is being reported
Should aspects of expense and time be considered in creativity projects?
If one wishes to make money doing creative projects, then time and expense should be considered. Operating a craft business is just like operating any other business when it comes to calculation of profits and pricing.
