Suppose Firms a and B Have the Same Amount of Assets

question 9

True/False

Suppose Firms A and B have the same amount of assets, pay the same interest rate on their debt, have the same basic earning power (BEP), and have the same tax rate.However, Firm A has a higher debt ratio.If BEP is greater than the interest rate on debt, Firm A will have a higher ROE as a result of its higher debt ratio.

Differentiate between power and influence and recognize how they are manifested in organizational settings.

Understand how Machiavellian values relate to organizational politics and power dynamics.

Recognize the role of effective communication and change management in minimizing organizational politics.

Understand the concept of countervailing power and how it operates in organizational relationships.

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Definitions:

Freight Costs

Expenses incurred by a company to transport goods from one place to another.

Purchase Price

The amount of money paid to acquire a good, service, or asset.

Materials Quantity Standard

The established amount of materials that should be used for the production of a unit of goods.

Labor Quantity Standard

The benchmark or established norm for the amount of labor input required to produce a certain amount of output, reflecting efficiency expectations.