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negative effects of a firm limited capital
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∙ 10y ago
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Why must firms make decisions about which goods they will produce?
because firms have access to limited resources of land, labor, and capital
Why are small firms important?
Small firms are important because it helps the beginner businessman to start his business with a limited initial capital investment.
Explain briefly the traditional view of the relationship between the capital structure and the value of the firm?
The traditional view of a firms capital structure is the process of increasing goodwill value of the firm, while limiting the use of capital expenses and controlling capital costs. The first achieves this through materializing its limited finances through financial leverage.
What is meant by the term substitution of capital for labor?
Changes in the price of capital have a similar effect on the demand for labour as a change in the price of any substitute good has on a demand curve. Thus if the cost of labour is relatively low, firms will reduce their use of capital (technology) resulting in greater use of labour in production.
Examples of barriers to entry?
Some examples: legal barriers (e.g.) state-enforced monopolies); high fixed capital costs (e.g.) automanufacturing); price manipulation by leading firms in uncompetitive markets (e.g.) leading firms in oligopolies); limited market size (e.g.) geographic isolation; low population; monopsony; oligopsony).
Why must firms make decisions about which goods they will produce?
because firms have access to limited resources of land, labor, and capital
Why are small firms important?
Small firms are important because it helps the beginner businessman to start his business with a limited initial capital investment.
Explain briefly the traditional view of the relationship between the capital structure and the value of the firm?
The traditional view of a firms capital structure is the process of increasing goodwill value of the firm, while limiting the use of capital expenses and controlling capital costs. The first achieves this through materializing its limited finances through financial leverage.
Is a firms cost of capital influenced by net income capital structure or par value of common stock?
Capital structure
What is a place for trading?
Ways by which firms may raise capital.
Who advises firms when raising capital?
For medium to large size companies, firms typically seek the services of an investment bank.
Whats the major firms and brands of Nestle limited?
nesle is a cream
How does the capital consumption allowance affect the firms cash flows?
answer the question
What is meant by the term substitution of capital for labor?
Changes in the price of capital have a similar effect on the demand for labour as a change in the price of any substitute good has on a demand curve. Thus if the cost of labour is relatively low, firms will reduce their use of capital (technology) resulting in greater use of labour in production.
Is there a universal optimal capital structure that would benefit all firms?
best universal capital structure for all companies?
What are the benefits of forward linkages?
Forward Linkages have the benefit of spill overs from upstream firms to downstream firms. Domestic firms benefit from MNEs vertical spillovers and competetion effect.
A firms working capital and its cash requirements?
Working capital is considered a fixed asset and is part of the operational capital. Working capital is calculated as current assets minus current liabilities.
