What the benefits of the DuPont analysis to deconstruct a firms ROE?

Q: What does it mean to “manage” risk? Should itsstockholders want a firm to “manage” all of therisks…

A: Company is not certain about few things which cannot be predicted exactly. In that case, there will…

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: what recent development in FP&A, if any, can significantly help companies deal with a black swan…

A: The answer for the theory question on the development in FP&A that helps companies in dealing…

Q: The WACC is an estimate.  Explain what the risk is of estimating the WACC lower than a company’s…

A: Wacc - it stands for weighted average cost of capital . it means cost of capital used to calculate…

Q: Which of the following is the risk due to a firm's industry?      Business risk     Financial…

A: In the ever-changing landscape of finance and investments, understanding different types of risks is…

Q: Why we have to valuate the company?

A: Value of a business refers to the business value. It shows the worth of the business as on a…

Q: How can we reduce investment risks by asset diversification?

A: Answer: Diversification is nothing but the strategy that reduces the risk by allocating assets to…

Q: s the limitations of ratio analysis as a tool for str

A: Ratio analysis is used quite often in the decision making but many time that results in quite bad…

Q: What type of risk is the risk that is unique to an individual firm?     Systematic risk…

A: There are different types of risks that are associated with investments like risk of change in state…

Q: what differentiates a superior investment manager from an inferior one?

A: 1. Superior investment managers are having a better degree of control over their emptions in…

Q: How do companies manage risk? What are the factors that contribute to a high-risk project?

A: In business there must be ups and downs in their business surroundings.  In every business there…

Q: e balance sheet have in respect to evaluating the health of the firm?

A: Balance sheet of the firm shows the overall financial position of the company and show how much are…

Q: How can Goodwill Industries capitalize on their strengths and how can they improve in their…

A: Goodwill is the brand reputation of a business. Goodwill help the business in operating the business…

Q: Define operating leverage with examples and why it is potentially risky.?

A: Operating leverage is used to measure a company’s fixed costs as a percentage of its total costs. A…

Q: What is investor overreaction? Which behavioral bias is primarily responsible for this effect, and…

A: Before going to give solution we need to know about some basic terms like investors. Investor is the…

Q: what is IPO underpricing? How do asymmetric information model explain this phenomena?Briefly explain

A: When an IPO( initial public offering )  is set at a price lower than its real market value. So, when…

Q: or

A: A hostile takeover is a sort of business purchase or merger that is carried out against the…

Q: how a firm might use a hedging to reduce risk in its business? please include examples

A: Hedging is an important tool in finance. A firm or a company often makes use of hedging to reduce…

Q: How do the FCFE, APV, and corporate valuation approaches differ from one another? How are they…

A: FCFE, APV and corporate valuation all are techniques of valuation on the basis of equity. This…

Q: Discuss the validity of risk diversification as a motivation for companies engaging in merger and…

A: Introduction : In simple words, when two companies join their operations to work together it is…

Q: If a company chooses to minimize WACC, what will be the effect on financial flexibility

A: Basic Terms :- Financial flexibility of the firm is the ability of the firm's capital structure to…

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 steps that would be needed for a company to transition from GAAP to IFRS?

A: GAAP refers to Generally Accepted Accounting Principles which is followed by US companies. IFRS is…

Cost volume profit (CVP) analysis

CVP analysis is a cost-volume-profit technique of cost accounting that examines the influence of varying levels of expenses and volume on operating profit. Cost Volume Profit analysis determines the relationship between Cost, Sale Volume, sales price, and Profit. CVP analysis is also known as break-even analysis which helps the business organization, banks, and their management to determine and forecast how a change in total sales and cost affects the profit of the organization. CVP analysis helps in financial decision-making for the budget, expense, tax, market investment, and corporate finance and aims at measuring variations in cost and volume.