Which of the following situations is most likely to pose a problem for companies that use return on investment as a measure of a manager’s performance?     a. Managers may be encouraged to purchase more operating assets than they otherwise should. b. Managers may be discouraged from purchasing operating assets that could improve overall profitability. c. Managers may be discouraged from reducing their division’s costs. d. Managers may be discouraged from paying off debt in order to reduce costs

Q: In the complex landscape of business decisions, the question of when to drop an unprofitable…

A: Factors to Consider When Dropping an Unprofitable Customer1. **Financial Impact**: Evaluate the…

Q: In terms of managing working capital, management’s goal should be to: a. Increase the working…

A: Working capital is the capital required to run the day to day trading operations. It is the…

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: Explain, with examples, why accruals reverse overstate the firm's profit.

A: Aggressive accounting is related to the practice of accounting which is designed in order to…

Q: T. Turnover due to low job satisfaction may be desirable if it facilitates the introduction of new…

A:

Q: What does the Law of Large Numbers tell us about investment managers’ performance? a. That great…

A: The large numbers theorem states that when the same experiment/study is repeated independently a…

Q: Only typed solution

A: The objective of the question is to understand the implications of a managerial preference for a low…

Q: Under what type of financial risks you would put these risk factors? Economic Distress…

A: A risk is something that can cause a possible loss or damage to an individual or a corporation and…

Q: How are conflicts between the shareholders and the management created? Which of the following is…

A: Conflicts between the shareholders and the management majorly arise due to the differences in…

Q: performance measures?

A: A good performance measure should have following qualities -  Provide a reasonable incentive to the…

Q: What is a breakeven point and how does that help managers make decisions? What are the 4 different…

A: Answer to the above questions are answered below :

Q: Which of the following statements about the agency costs of equity is false? Agency costs of equity…

A: This Statement is False "Agency costs of equity are greater if managers have greater incentive to…

Q: Managers owning a small proportion of a firm's equity can be expected to work less, maintain more…

A: The owners or shareholders and the management team are different in a company. Ideally, managers…

Q: When a company is decentralized, top management will have little time to focus on long-term strategy…

A: 1) This statement is FALSE Decentralization means transfer of Authority , Responsibility ,…

Q: What is turnover? What does it measure? Describe this in your own words. Writing a formula is not a…

A: What is the Turnover   Turnover is the Gross sale made by the company. A company may selling the…

Q: rrier to entry that helps increase the threat of new entrants for an incumbent firm using a…

A: In the context of a competition, cost leadership refers to a company's claim to be the cheapest…

Q: Suppose profits earned by one firm are independent of profits earned by other firms. When managers…

A: Individuals, organizations, or entities that possess equity or shares in a corporation are known as…

Q: computing ROI,

A: In computing ROI, land held for future use Correct Answer Is A  considered a nonoperating asset.

Q: If a division has negative net operating income, the company's profits might not increase even if…

A: The term "discontinued operations" is used in accounting to describe business divisions that have…

Q: Financial ratio analysis is a widely used tool for assessing the "health" of an organization and…

A: Financial ratings are quantitative indicators that distinguish important information from a…

Q: Differentiate between a cost center, profit center, and investment center. What is the major…

A: Three different sorts of organizational units—cost centers, profit centers, and investment…

Q: Is there a good argument against giving long-term shareholders more say in running a corporation?…

A: The topic involves assessing the validity of arguments against granting increased influence to…

Q: pany that is seeking to increase return on investment should attempt to decrease: 1. sales…

A: ROI: It basically means the average return on an investment in a particular period in which the…

Q: A. The trend for cost of goods sold is increasing as a percentage of sales and the trend for total…

A: Cost of goods sold are the direct allocated cost to the goods manufactured, which have been solved…

Q: CEO: "If we were to increase the price of our goods the company's break-even point would be lower,"…

A: Introduction : Subtracting variable costs, including manufacturing, marketing, and administrative…

Q: Why might relevant costs analysis be bad for a company if used too frequently?   Multiple Choice…

A: Introduction: In managerial accounting, avoidable expenses that are only incurred in conjunction…

Q: Management remuneration schemes create incentives for managers. If a firm 's performance is below…

A: Positive Accounting Theory helps in explaining the actual accounting practices. It helps to know why…

Q: Residual income should be used over return on investment (ROI) to evaluate managers’ performance…

A: The objective of the question is to understand why residual income should be preferred over return…

Q: 33) The case against advertising includes the fact that A) firms spend large sums of money to create…

A: The case against advertising includes the fact that:A) firms spend large sums of money to create…

Q: Statement 1. Marketing managers seek the help of finance in terms of evaluating decisions such as…

A: Statement 1: Marketing managers seek the help of finance in terms of evaluating decisions such as…

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

A: The problem statement wants to identify the conditions where the excessive use of financial leverage…

Q: agency costs may occur if  A. Managers make decisions for their own best interest  B. Managers may…

A: Agency costs refer to the expenses incurred by a principal-agent relationship due to conflicts of…

Q: What are some of the non-financial factors you would consider if you were faced with a decision…

A: When evaluating whether to keep or terminate a business segment, it's crucial to consider not only…

Q: Companies have found that offering discounts to customers in return for early payment can be…

A: Inventory management is an integral part of working capital management. Inventory is a crucial…

Q: Using accrual accounting to evaluate the performance of a manager may create conflicts with the use…

A: Using accrual accounting to evaluate the performance of a manager may create conflicts with the use…

Q: ROI based on the gross book value of assets

A: ROI indicates the profitability of the investment made. It is the measure of net income in relation…

Q: Inflation accounting is favored by modern financial analysts over the historical cost accounting as…

A: Following are the disadvantages of historical cost accounting in comparison with inflation…

Q: Only typed solution

A: The objective of the question is to understand what a managerial preference for a very low degree of…

Q: Companies have found that offering discounts to customers in return for early payment can be…

A: The additional current assets that a corporation retains on its balance sheet as a liquidity buffer…

Q: Which of the following best describes the potential impact of business risk on Earnings Quality?…

A: Earnings Quality: The earnings quality or quality of earnings refers to the reliability with which a…

Managing Agency Conflict

Conflict is defined as an act of disagreement between two parties caused by uncertainties between them. The conflict has a negative outcome that affects both parties involved in the argument. Conflict arises when the parties' thoughts do not align or go in opposite directions. Conflicts have negative consequences for both the individual and the business. As a result, it should be avoided.