Because Investors Often Cannot Be Fully Compensated for the Benefits

question 120

True/False

Because investors often cannot be fully compensated for the benefits their ideas provide to others, they may produce too little technology. Thus, there is a potential role for government in providing funds for research and development, both in industry and in universities.

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Definitions:

Inventories

Items such as goods or merchandise held by a company, intended for sale or production.

Debt Ratio

A financial ratio that measures the extent of a company's leverage, calculated by dividing its total liabilities by its total assets.

TIE Ratio

The Times Interest Earned (TIE) ratio is a financial metric used to measure a company's ability to meet its debt obligations, calculated by dividing earnings before interest and taxes (EBIT) by interest expenses.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales generated by comparing the net income and the revenue of a company.