Spending too little on fixed assets is also harmful to the firm how?

Q: What happens if economic engineers invest too much in assets?

A: Economic engineers always combine finance with engineering and develop various models to deal with…

Q: Describe how underinvestment and asset substitution can destroy firm value and how risk management…

A: Underinvestment and asset replacement can have a negative impact on a company's value, however risk…

Q: One of the indirect costs of financial distress is having to sell assets at lower than market value.…

A: Indirect costs of financial distress is not the directly present cost in the financial statements…

Q: Is it financial expediency for firms to borrow?

A: The acquisition of debt funds by businesses is far more convenient than any form of funds and far…

Q: What are the benefits of merging and diversifying one's assets in order to lower one's risk?

A: Diversification is a process of combining different types of assets with lower correlation in order…

Q: What can be said about a firm whose owners’ equity is a negative amount? How could such a situation…

A:

Q: Is capital rationing always a bad thing? Explain

A: Capital rationing: Capital rationing is restriction bestowed upon new investments in the…

Q: minimize overall risk

A: A manager has to make different decisions related to choosing a project.  A project giving a higher…

Q: What are the possible actions that a firm can take if it experiences a financial failure?

A: Financial failure of the firm could be resulted because of overspending, higher degree of illiquid…

Q: Firm's that choose to hold more current assets are in general is more ILLIQUID that firms that do…

A: Current assets are resources of value that the company expects to utilize or transform in 1 year to…

Q: What can happen if a firm is poorly managed? flotion roto in 10 nercent end the real

A: A firm is effected by many ways if not managed properly. If a firm is poorly managed means that…

Q: Why would a company choose to factor itsreceivables, given that it will get less money than…

A: Sales means delivery of goods and services by the seller. It can be for cash sales or sales made on…

Q: How does/can a financial intermediary reduce the risk facing them due to Adverse Selection?

A: The question is based on one of the key issue in financial market, banking industry,  about the…

Q: Too much investment in current assets reduces firm profitability, whereas too little investment in…

A: Too much investment in current assets reduces firm profitability: The firm that invests more in…

Q: Explain how pure risk has an adverse effect on the economy

A: Pure risk is one of the major type of risk which is beyond the control and can affects the economy…

Q: Is excess liquidity a serious issue? Would insufficient liquidity be much worse? Please discuss

A: Excess liquidity means that the company is holding excess assets in cash or liquid instruments that…

Q: What are the problems of too much or too little liquidity?

A: If the available liquidity is more than the required amount then such an excess is called Excess…

Q: What should a company do when the cost of eliminating the conditions that create an IT risk exceeds…

A: Risk management is the process of identifying, assessing, and prioritizing risks, followed by the…

Q: Why is it often difficult for the averageinvestor to take advantage of underpricing?

A: Under Pricing of the stock refers to the situation when the current market price of the company’s…

Q: Its difficult for payments bank to survive in long run ?

A: Payment banks- Meaning Carry out most of the banking operations but are not allowed to provide loans…

Q: What could possibly go wrong while using financial leverage? Do you think it should be utilized by a…

A: Financial leverage: Financial leverage is a word that describes the use of borrowed money (debt) to…

Q: TRUE OR FALSE Financial sector creates products for the management of risk, thus risk can be…

A: Risk management is the process of identifying, analyzing, and accepting or mitigating uncertainty in…

Q: What can you say about the market value of the company? is it positve or is negative?

A: In finance market value of a company is the worth of the company and the worth of the company is…

Q: s it important to identify what costs will be eliminated in the conduct of finan

A: Turnaround recovery ways are a variety of measures that corporations use to get over a amount of a…

Q: What factors contribute to the risk of overusing financial leverage?

A: Financial leverage is the use of debt in the capital structure to acquire additional assets. Use of…

Q: What are the disadvantages of the financial intermediaries and the negative ways they can impact the…

A: A financial intermediary is that entity that acts as a middleman in a financial transaction taking…

Q: what if in the future, it will earn a negative RCE. Is this possible for a company? Why?

A: RCE = return on capital employed. ------------------------ Return on capital employed is the ratio…

Q: (3) Which size of firm, large or small, is moreprone to business failure? Why?

A: Business failure is defined as the ceasing operations of the company due to the inability of the…

Q: Under which of the following conditions could the overuse of financial leverage be detrimental to…

A: Financial leverage is more use of debt which continous payment of interest rather than issues of…