What will be the Conditions for Positive Leverage Before Tax?

Q: What is meant by the term financial leverage?

A: Borrowed Capital: The money which is borrowed by a company from outsiders for a specified period of…

Q: From a financial perspective, how are projects chosen when capital rationing exists? Do you think…

A: In this question, we are required to determine how projects are chosen based on capital rationing…

Q: Why do come companies prefer to use discounting in their capital investment decisions?  What is a…

A: Capital Investment:-It is an investment that a company made to purchase its fixed assets or…

Q: weighted-average cost of capital

A: Weighted average cost of the capital represents the rate on which the company would be paying to…

Q: What is meant by positive financial leverage?  What about negative financial leverage?

A: Leverage -It refers to the use of source of funds  for which the firm has to pay a fixed cost.

Q: When comparing levered vs unlevered Capital structures why does leverage work to increase FPS for…

A: There can be two types of firms based on their capital structure. The firm which is completely…

Q: What are the reasons for using the private rate of return as thethe opportunity cost of capital for…

A: Opportunity cost of capital is the rate which an investor foregoes due to the investment in other…

Q: What is capital rationing, what conditions lead toit, and how should it be dealt with?

A: Capital budgeting is a process in which capital projects are assessed in terms of their viability…

Q: In the context of capital budgeting, what is meant by the word “discounting”?

A: The term 'discounting' in the context of capital budgeting refers to the process of determining the…

Q: Why is financial leverage is attractive

A: Introduction : In simple words, financial leverage refers to the process in which a company buys…

Q: Regarding the trade-off theory, capital structure is a trade-off between: O tangible and intangible…

A: The capital structure refers to the mix of various available sources of capital which is used by a…

Q: Should short-term

A: The cost of capital is the rate of return that is expected by the firm to earn from its investment…

Q: Is cost of capital set by investors or managers?

A: Cos of capital (Coc) is rate of return required to make capital budgeting decisions for example,…

Q: What does effective capital budgeting require?

A: Capital budgeting is the process of evaluating large-scale investments or expenditures. The…

Q: Does the benefit-cost analysis result in definite proof that the project would have little value to…

A: To prevent or reduce the pollution for evaluating the public policies the cost benefit analysis is…

Q: What is the difference between financial leverage and operating leverage

A: Operating leverage: Operating leverage is a sign of how a corporation's costs are organized and is…

Q: What are the weaknesses of capital market research?

A: Capital market is the market in which securities are traded. Primary market and secondary market are…

Q: Why does net working capital appear with both negative andpositive values?

A: Working capital also known as net working capital is nothing but the difference between the current…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.