Explain How a Firm Can Create Value from Internal Innovation

question 17

Essay

Explain how a firm can create value from internal innovation and deal with the competitive rivalry it engenders.

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Definitions:

Debt Ratio

A financial ratio that measures the extent of a company’s leverage, computed by dividing total liabilities by total assets.

Financial Leverage

The use of borrowed funds to increase the potential return of an investment, which also increases the risk.

Posting Reference Column

A column in journals and ledgers where account numbers related to specific transactions are recorded for tracking purposes.

Ledger Accounts

A complete record of all the financial transactions over the life of a company, organized by account.