A Business Can Be Managed and Run in Either a Prudent

question 52

Essay

A business can be managed and run in either a prudent and responsible manner or a stupid manner.Explain how a prudent and responsible businessperson would manage and run a new business that he or she has just began as compared to a person who was not prudent or responsible.

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Definitions:

P/E Ratio

Price-to-earnings ratio, a valuation metric for determining the relative worth of a company's shares by dividing stock price by earnings per share.

Cost of Equity

The return that investors require for investing in a company's equity, reflecting the risk of the investment.

Earnings Per Share

A metric used to determine a portion of a company's profit allocated to each outstanding share of common stock, calculated as net income divided by the number of shares.

Preferred Stock

A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock, often with fixed dividends.