Define Informational and Normative Social Influence and Describe Two Circumstances

question 34

Essay

Define informational and normative social influence and describe two circumstances under which people are more likely to be swayed by informational as opposed to normative social influence.

---

Definitions:

Financial Leverage

Use of borrowed funds to increase the potential return of an investment.

Basic Earning Power

A financial metric that measures a firm's ability to generate earnings from its operations before the impact of taxes and financing costs.

ACP

Average Collection Period, indicating the average number of days it takes a company to collect payments from its credit sales.

Du Pont Analysis

A framework for analyzing a company's return on equity (ROE) by breaking it down into its constituent components to assess operational efficiency.