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Why would a firm be profitable yet illiquid?
Some of the reasons maybe : A) its ongoing capital investment (in fixed assets / facilities) to take care of future growth is in excess of cash profits and reserves; B) its working capital requirements arising from growth requires more cash than provided by cash profits; C) it has huge debt repayment obligations which are a burden on its cash profits; D) it has large amounts stuck in illiquid and non-moving assets (for e.g. stock which is not moving or debtors / accounts receivables which are not being realised)
What happens to stock when a firm is taken private?
When a firm is taken private, the stock cannot be bought or sold on the public exchange. This is called making the stocks illiquid.
Is profitability of the firm important in the short term debt paying ability of a firm?
Yes, profitability is important for a firm's short-term debt paying ability, as it influences cash flow and the capacity to meet immediate financial obligations. A profitable firm typically generates sufficient income, which can be used to cover short-term liabilities. However, liquidity also plays a crucial role; a firm may be profitable yet still face challenges if it lacks sufficient liquid assets. Therefore, while profitability is significant, it should be considered alongside liquidity to assess short-term debt repayment capability effectively.
Is property an illiquid asset?
yes
What is the most profitable form of farm diversification?
Franchising is a profitable form of carrying out firm diversification. The identity of the firm and its standard procedures are maintained but the franchisee commits a certain amount of money to set up a venue and trade in the franchiser's business model. Franchising can allow a business to quickly expand in a foreign territory.
Why would a firm be profitable yet illiquid?
Some of the reasons maybe : A) its ongoing capital investment (in fixed assets / facilities) to take care of future growth is in excess of cash profits and reserves; B) its working capital requirements arising from growth requires more cash than provided by cash profits; C) it has huge debt repayment obligations which are a burden on its cash profits; D) it has large amounts stuck in illiquid and non-moving assets (for e.g. stock which is not moving or debtors / accounts receivables which are not being realised)
Is it true that if a firm is profitable its survival is guaranteed?
No. A lot of things can cause a profitable firm to collapse.
When is a firm profitable?
A firm is considered to be profitable when they make money. This happens when the lawyers win most of their cases.
What happens to stock when a firm is taken private?
When a firm is taken private, the stock cannot be bought or sold on the public exchange. This is called making the stocks illiquid.
What does illiquid mean?
illiquid means not liquid il means not + liquid = illiquid. :-)
Which financial statement shows how profitable the firm has been?
Income Statement
Is profitability of the firm important in the short term debt paying ability of a firm?
Yes, profitability is important for a firm's short-term debt paying ability, as it influences cash flow and the capacity to meet immediate financial obligations. A profitable firm typically generates sufficient income, which can be used to cover short-term liabilities. However, liquidity also plays a crucial role; a firm may be profitable yet still face challenges if it lacks sufficient liquid assets. Therefore, while profitability is significant, it should be considered alongside liquidity to assess short-term debt repayment capability effectively.
Is it profitable for a firm to continue employing additional resources as long as?
Marginal revenue product = marginal cost
Is property an illiquid asset?
yes
The value of a firm's reputation location earning capacity and other intangibles that make the business profitable are?
According to the book "Introduction to business" by Pride, Hughes and kapoor. Goodwill, is the value of a firm's reputation, location, earning capacity and other intangibles that make the business a profitable concern.
What accounting statement best addresses the fact that a firm that's profitable on paper can be forced into bankruptcy?
income statement
What is a cartel and is such merger profitable?
A cartel is a joing of all business of same sort to form a single business. Cartel mergers are profitable. For example there are three firms which behave as a cartel, if all firms collude to act as a single firm, the merger will be profitable in oligopolistic industries. It will ensure the firm will gain an economic profit and will eventually drive off the weaker firm and the price benifit will go to consumers. (Term cartel is used when similar businesses merge to form a single business, a monopoly).
