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What is the formula for evaluating a business' goodwill?
Goodwill (by Average profit Method) = Average profit X No.of years purchaseGoodwill(by Super profit method) Normal profit = Average capital employed X Normal rate of return / 100Super profit = Actual profit- Normal profitGoodwill = Super profit x Number of years purchase (usually specified in question)
What is the remuneration of capital?
It is similar to Return on capital employed (ROCE).
How is the concept of a normal return on investment related to the distinction between business and economic profit?
Economic profit is the profit made on an investment of some sort in which inflation and other economic factors have been considered. Normal return on investment is just the net profit made in the investment (simple subtraction).
What is the significance of the law of diminishing return?
It significantly helps in gathering more profit in any given profit-base organization.
Difference between marginal efficiency of investment and marginal efficicency of capital?
MEC is the expected rate of return on capital and MEI is the expected rate of return on investment.
What is a positive return on capital?
A positive return on capital is a profit. When the sales of a product are greater than the cost of producing the product, the company will make a profit.
Why net profit is disclosed on liabili ty side of balance sheet?
because profit is earned on the capital invested which is not the company's money. capital is also like a liability and the profit should actually be given to the owner and the money is still there with the company so it is again a liab. for the company to pay the profit which is a return on the capital invested by the owner.
What is the responsibility of Financial accountants?
To calculate the net profit/losses and other accounts (Return On Capital Employed, Capital Employed, Working Capital, etc) of a particular business.
Is the return of capital good or bad for investors?
The return of capital is generally considered good for investors because it represents the profit or gain they have earned on their investments. It allows investors to grow their wealth and achieve their financial goals.
Why does a business value its repeat custom?
they value the repeat custom as if they can get customers to return they will make maximum profit within the organisation.
When entrepreneurs look for venture capital they are looking for?
investors willing to risk money in a new company in return for the chance to get a lot of profit for their money
When entrepreneurs are looking for venture capital they are looking for?
investors willing to risk money in a new company in return for the chance to get a lot of profit for their money
What are profit ratios?
Profitability Ratios measure the company's use of its assets and control of its expenses to generate an acceptable rate of return. The purpose of these ratios is to help us identify how profitable an organization is. As an investor I would like to invest only in company's that are profitable and in best case profitable than all their industry peers. Some of the ratios that can help us identify a company's profitability are: 1. Gross Margin or Gross Profit Margin 2. Operating Margin or Operating Profit Margin or Return on Sales (ROS) 3. Profit Margin or Net Profit Margin 4. Return on Equity (ROE) 5. Return on Investment (ROI) 6. Return on Assets (ROA) 7. Return on Assets DuPont (ROA DuPont) 8. Return on Equity DuPont (ROE DuPont) 9. Return on Net Assets (RONA) 10. Return on Capital (ROC) 11. Risk Adjusted Return on Capital (RAROC) 12. Return on Capital Employed (ROCE) 13. Cash Flow Return on Investment (CFROI) 14. Efficiency Ratio 15. Net Gearing or Gearing Ratio 16. Basic Earnings Power Ratio
Which word doesn't belong dividend profit return prophet?
prophet - someone who has been contacted by God (or a God) and speaks on their behalf. The other words all relate to a profit - the amount of money you make from a venture, also called a dividend or the return on your capital outlay.
What is the formula for evaluating a business' goodwill?
Goodwill (by Average profit Method) = Average profit X No.of years purchaseGoodwill(by Super profit method) Normal profit = Average capital employed X Normal rate of return / 100Super profit = Actual profit- Normal profitGoodwill = Super profit x Number of years purchase (usually specified in question)
Authorized and issued share capital?
Authorized share capital is that maximum amount of share capital a company can do it’s business and return in article of association of company and company cannot raise more capital then this limit unless changes the limit of authorized capital.Issued share capital is that amount of capital which is issued to public for purchase or invest in company.
How does marginal revenue and marginal utility relate to capital?
Marginal revenue/margina utility return from capital represents the benefit of capital. When determining the optimal amount of capital, we must take into account the point when marginal benefit = marginal cost. This optimises profit/utility.
