Question1: Objectives are commonly stated in terms such as growth in assets, growth in sales, profitability,...

Question1:

Objectives are commonly stated in terms such as growth in assets, growth in sales, profitability, market share, degree and nature of diversification, and so on. Discuss, compare and contrast financial objectives and strategic objectives please use examples for further explanation.

Expert Solution

A firm may have different objectives in different markets. For example a firm in a fully competitive market may aim at increasing production by reducing cost of production. In a fully competitive market, every firm is a price taker. In order to increase profit, it needs to be more efficient than other firms.

Likewise, a firm in monopolistic competition, or oligopoly may have different objectives accordingly.

There are many theories that state different objectives of firms. Managerial theory states that managers try to increase sales whereas according to one theory a fim may emphasise on increasing its market share. Such objectives are said to be strategic objectives where a firm looks at consolidating its position in the market.

For example, in a telecom market which is generally oligopolistic in nature, a firm may pursue increasing its market share rather than looking at short term profitability.

A telecom operator in India, Jio Inc. owned by Reliance Industries, invested at least $30 billion dollars, mostly on loan to offer its services at most affordable rate in the market which led to the firm becoming the largest telecom company in the country. Here, Jio looked at long term strategic objectives and not profitability in the short term.

Thus, we can say that a firm or a company may have different objectives depending on the market structure it is operating in.

Rahul Sunny answered 2 years ago

What are the stated objectives of the Federal Reserve System?

What are the stated objectives of the Federal Reserve System?What means does it have in controlling monetary policy, i.e. rates, reserve requirements, etc.What metrics would you use to determine the success, or failure of our central bank?

Assess Yellow Hammer’s income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios...

Assess Yellow Hammer’s income statement by calculating the sales growth, EBITDA profitability (EBITDA/Sales) and coverage ratios using EBIT and EBITDA for each year. SHOW YOUR WORK (5 points) Yellow Hammer Corporation Income Statement Year Ended December 31 (in $ millions) 2020 2019 2018 Total sales 186.7 176.1 165.4 Cost of sales 153.4 147.3 140.6 Gross Profit 33.3 28.8 24.8 Selling, general, and administrative expenses 13.5 13.0 11.6 Research and development 8.2 7.6 6.4 Depreciation and amortization 1.2 1.1 1.0 Operating...

AFC Ltd Sales growth 10% Current assets/Sales 15% Current liabilities/Sales 8% Net fixed assets/Sales 77% Costs...

AFC Ltd Sales growth 10% Current assets/Sales 15% Current liabilities/Sales 8% Net fixed assets/Sales 77% Costs of goods sold/Sales 70% Depreciation rate 10% Interest rate on debt 5% Interest paid on cash and marketable securities 4% Tax rate 30% Dividend payout ratio 40% Year 0 1 2 3 4 5 Income statement Sales 1000 1100 1210 1331 1464 1611 Costs of goods sold -700 -770 -847 -932 -1025 -1127 EBITDA 300 330 363 399 439 483 Interest payments on debt...

In modern cosmology, it is commonly stated to the public that as we look deeper and...

In modern cosmology, it is commonly stated to the public that as we look deeper and deeper into space, we are seeing further into the past. CMB is the relic of the big bang after photon decoupling following recombination. However, if we pushed further back in our conceptualization, eventually we get to the period of inflation, and then to a period before that where energy density of the universe was some large value (possibly infinite). So why would it be...

Profitability Ratios The following ratios are commonly used to analyze profitability. Note that each ratio compares...

Profitability Ratios The following ratios are commonly used to analyze profitability. Note that each ratio compares net income to some other financial aspect of the company. Because each ratio reveals something different about a company's income, they are best used in tandem so that a broad understanding of a company's profitability can be obtained. Profitability Ratio Relationship Profit Margin Income to Sales Return on Equity Income to Stockholder’s Equity Return on Assets Income to Total Assets Earnings per Share Income to Shares Outstanding Price to...

(Evaluating profitability) The Malia Corporation had sales in 2019 of $60 million, total assets of $46...

(Evaluating profitability) The Malia Corporation had sales in 2019 of $60 million, total assets of $46 million, and total liabilities of 15 million. The interest rate on the company’s debt is 6 percent and its tax rate is 21 percent. The operating profit margin was 11.8 percent. What were the company’s operating income and net income? What was the operating return on assets and return on equity? Assume that interest must be paid on all of the debt. The operating...

(Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 61$61 million, total assets of...

(Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 61$61 million, total assets of $ 50$50 million, and total liabilities of $ 20$20 million. The interest rate on the company's debt is 5.85.8 percent, and its tax rate is 3535 percent. The operating profit margin is 1212 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must...

(Evaluating profitability) The Malia Corporation had sales in 2015 of $63 million, total assets of $45...

(Evaluating profitability) The Malia Corporation had sales in 2015 of $63 million, total assets of $45 million, and total liabilities of $25 million. The interest rate on the company's debt is 6.4 percent and its tax rate is 30 percent. The operating profit margin was 12.1 percent. What were the company's operating income and net income? What was the operating return on assets and return on equity? Assume that interest must be paid on all of the debt. a. What...

In a two-stage dividend growth model, it is commonly assumed that dividend growth drops from a...

In a two-stage dividend growth model, it is commonly assumed that dividend growth drops from a high rate in the first stage to a low perpetual growth rate in the second stage. Discuss the reasonableness of this assumption and what happens if this assumption is violated.

Please explain the terms commonly associated with networking in a paragraph or two.

Question