The Following Are Useful Tools to Manage Power and Politics

question 38

Multiple Choice

The following are useful tools to manage power and politics during implementation:

• A) Incentives
• B) Countertrading
• C) Sanctions
• D) All of the above

Evaluate the effects of taxes on a firm's cost of capital calculations.

Apply the concept of financial leverage to understand its impact on earnings and cost of equity.

Understand the relationship between earnings before interest and taxes (EBIT) and the firm's financial performance.

Calculate and interpret the firm’s unlevered cost of capital.

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Definitions:

Capital Intensity Ratio

A financial metric that measures the amount of capital needed per unit of output or the capital required to generate a dollar of revenue.

Operating Capacity

The maximum output that a company can produce under normal conditions.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholder's equity.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its financial leverage or debt proportion.