Runathon Inc

question 55

Multiple Choice

Runathon Inc. opened a store that displayed shoe brands only. The employees were polite and professional. Runathon also had experts who advised customers on the type of shoe best suited for a particular sport. A few years later, another company called FitRight Corp. opened next to Runathon. Although FitRight stocked shoe brands, sportswear, and other gear, it was not as profitable as Runathon because its salespeople were not as experienced and knowledgeable. Which of the following factors of inimitability did Runathon Inc. have?

• A)Complexity
• B)Time compression diseconomy
• C)Path dependence
• D)Virtuous circle

Understanding how leverage affects a firm’s return on equity (ROE) and earnings per share (EPS).

Comprehending the factors influencing a firm's decision to adjust its capital structure.

Appreciating how market conditions and firm-specific factors may necessitate shifts in capital structure.

Recognizing the practical constraints and limitations of financial theories in real-world applications.

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Definitions:

State Unemployment Tax

A tax paid by employers to a state fund to cover benefits for workers who have lost their jobs; rates can vary based on the employer's industry and experience with unemployment claims.

Federal Income Tax

A charge imposed by the IRS on the yearly income of individuals, corporations, trusts, and other legal entities.

Social Security Tax

Taxes collected to fund social security programs, typically levied on both employers and employees.

State Disability Insurance

A government insurance program that provides partial wage replacement to eligible workers who are unable to work due to a non-work-related illness or injury.