Although There Are Many Different Cultural and Legal Approaches Used

question 66

Essay

Although there are many different cultural and legal approaches used in corporate governance worldwide, there is a growing consensus on what constitutes good corporate governance. List and explain at least three standardized common principles of good corporate governance.

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Definitions:

Discount Rate

This is the rate used during discounted cash flow analysis for evaluating the present value of cash flows anticipated in the future.

Financial Break-even Point

It is the level of revenue necessary to cover a company’s fixed and variable costs, without generating profit or loss.

Degree of Operating Leverage

A financial metric that measures the sensitivity of a company's operating income to changes in its sales, highlighting the effect of fixed costs on profits.

Conventional Cash Flows

Conventional cash flows involve an initial outlay followed by a series of positive cash inflows, typically seen in standard investment scenarios.