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If a firm increases its net income, its tax liabilities may also increase, leading to higher tax payments. Additionally, retained earnings may rise, potentially decreasing the amount of cash available for immediate distribution to shareholders as dividends. Furthermore, the firm might face increased scrutiny from investors and analysts, which can lead to heightened expectations for future performance.
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Does the after tax cost of a deductible expense increase or decrease as the taxpayer's marginal income tax rate increases?
Decrease The higher the marginal rate, the more a person or firm is shielded from expenses.
A perfectly competative firms marginal cost exceeds its marginal revenue at its current output To increase its profit the firm will?
To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point
Who does Residual income of a firm belongs to?
The residual income of the firm belongs to
What transaction would cause a decrease in a liability and a increase in a liability?
Answer:This would be where one type of liability is exchanged for another liability. ExampleThe firm has accounts payable that are due. Since they are short of cash, the firm agrees with one supplier that the firm receives an extention of 2 months, with 5% annual interest.The invoice now needs to be categorized as a note payable. As a result accounts payable is reduced and notes payable increase.
Which one of the following will increase the value of a firm's net working capital?
Net working capital is calculated as current assets minus current liabilities. To increase a firm's net working capital, one could either increase current assets, such as by boosting cash or inventory levels, or decrease current liabilities, such as by paying off short-term debt. For example, collecting accounts receivable more quickly would increase current assets and thus raise net working capital.
Does the after tax cost of a deductible expense increase or decrease as the taxpayer's marginal income tax rate increases?
Decrease The higher the marginal rate, the more a person or firm is shielded from expenses.
An increase in a firm's expected growth rate would normally cause its required rate of return to do what?
possibly increase, possibly decrease, or possibly remain unchanged
A decrease in a firm's willingness to pay dividends might result from an increase in its?
Expenditure & losses...
A decrease in a firm's willingness to pay dividends is likely to result from an increase in its what?
A decrease in a firm's willingness to pay dividends is likely to result from an increase in its profitable investment opportunities. A dividend is a payment made by a corporation to its stockholders. It is a usually a distribution of profit.
What is objectives of the firm?
Succeed 1. Increase sales 2. Decrease costs 3. Operate efficiently 4. Increase profit
A perfectly competative firms marginal cost exceeds its marginal revenue at its current output To increase its profit the firm will?
To increase profit the firm will decrease output to a point where MC=MR. This is the Profit Maximisation point
Who does Residual income of a firm belongs to?
The residual income of the firm belongs to
What transaction would cause a decrease in a liability and a increase in a liability?
Answer:This would be where one type of liability is exchanged for another liability. ExampleThe firm has accounts payable that are due. Since they are short of cash, the firm agrees with one supplier that the firm receives an extention of 2 months, with 5% annual interest.The invoice now needs to be categorized as a note payable. As a result accounts payable is reduced and notes payable increase.
Will a bond's Yield to Maturity increase or decrease if there is a change in the bankruptcy code that makes it more difficult for bondholders to receive payments if the firm declares bankruptcy?
Assuming that this situation occurs after the Bond is issued and is trading in the secondary market. All things being equal, if the change is not already factored into the price or yield of the bond it would increase the YTM. However, for a AAA rated bond the increase will be much lesser than the increase on a low rated bond. Typic ally for a low rated bond the increase in YTM wouldn't matter much since the liquidity of it would decrease sharply if the firm were to go bankrupt.
Why would a firm raise the price of a product after a producer determines that the demand for one of its products is inelastic?
The firm would raise the price because the firm's total revenues would probably increase.
Difference between running a firm in a short run and in a long run?
The short run is a firm's technology and the size of its factory, store, or office are fixed. In the long run, a firm is able to adopt new technology and to increase or decrease the size of its physical plant.
Is it true or false that the objective of a firm is to maximize total revenue?
Generally speaking, the main objective of a firm is profit maximisation. This is not always the case, however, as some firms have different goals, including providing charitable services, satisficing, and providing a high quality good or service.Revenue (income) increases profit, while expenses decrease profit. Therefore, if a firm's revenue increases more than their expenses increase, they will generate a greater profit.
