Trade-off and Pecking-order Theories

Trade-off and Pecking-order Theories A profitable company requires less need for external financing. To satisfy financial needs, firms will often turn to debt. A profitable company usually relies on less debt. However, according to the trade-off theory, the more cash flow a profitable firm has, the more debt it will generate. As the debt capacity […]

Market Efficiency Theory

Market Efficiency Theory Market efficiency was formulated by Eugene Fama in 1970, labeled as efficient market hypothesis. His theory suggests that stock and market value are based on publicly available information. Investors invest with the goal that their investment will generate a positive return on their investment. An efficient capital market is when a stock […]

Diversification of Portfolios

Making an Investments I agree with this statement. It is the decision of the employee to decide where to place their finances and trust. In regards to the Enron scenario, considering there were many options for the employees to choose from, they could have taken their investment and placed it elsewhere. Alternatives for investment options […]

Analyzing Project Feasibility

Making a Business Case It is important to calculate the profit estimate when taking on new projects. Determining the net present value (NPV) of a project helps determine if a project should be accepted or rejected. The NPV is an important method to use in concluding the value of projects. The NPV formula determines the value of […]

Dividend and Non-Dividend Stock Valuation

Dividend and Non-Dividend Stock Valuation Investors who invest in stocks often like to receive returns on their investment in the form of dividends. However, not all companies opt to offer dividends to their investors. There are three variables that affect the valuation of a dividend and non-dividend paying stocks and how stock valuation is influenced. […]

Loan Evaluation

Financial Ratio Evaluations Determining the ratio level of a company is a predictor of failure for small businesses, and obtaining data can be difficult. Financial ratios are effective for comparing different types of financial information. Short-term solvency financial ratios should be examined to determine whether a small business is an ideal business for a loan. […]

Corporate Governance

A stakeholder is a group or individual that assist with structuring a business, and can influence the decision making process. Stakeholders often focus on multiple levels of a business depending on their position within the firm and their knowledge of the business and market. Shareholders have a general goal of maximizing business profits and their […]

Trends in MIS

Major trends in technology that impact communication within organizations include; voice over Internet protocol, Web 2.0, and virtual networks. Unlike virtual networks, face-to-face (F2F) meetings provide limited support for global projects and establishments. Within virtual networks, a powerful infrastructure and high-speed data services are required from both network users, which can help prevent interruption of […]

IT Risk Mitigation

Technology has allowed hackers to create systems that bypass security measures while mining data from web sites. Organizations have almost become completely dependent on technology to run their everyday operations. In situations where security threats are possible, it is the responsibility of the decision makers to minimize damages and losses generated by security incidents. A […]