Why is social responsibility important in marketing?

July 9, 2024 No Comments

A: Social responsibility in marketing is important because the practice involves focusing efforts on attracting consumers who want to make a positive difference with their purchases. Recyclable packaging, promotions that spread social awareness and portions of profits that benefit charitable groups are examples of social

Why is the capital adequacy ratio important to shareholders?

July 9, 2024 No Comments

A: The capital adequacy ratio (CAR) measures the amount of capital a bank retains compared to its risk. National regulators must track the CAR of banks to determine how effectively it can sustain a reasonable amount of loss. National regulators must also determine if a

Why is the TTM (trailing twelve months) important in finance?

July 9, 2024 No Comments

A: Using trailing 12-month (TTM) figures is an effective way to analyze the most recent financial data in an annualized format. Annualized data is important because it helps neutralize the effects of seasonality and dilutes the impact of non-recurring abnormalities in financial results, such as

Why is work in progress (WIP) considered a current asset in accounting?

July 9, 2024 No Comments

A: Accountants consider work in progress (WIP) to be a current asset because it is a type of inventory asset. Accountants consider inventory assets to be current, because they are reasonably expected to be converted into cash within one year’s time. Some accountants distinguish between

Why should sunk costs be ignored in future decision making?

July 9, 2024 No Comments

A: A sunk cost is a cost that cannot be recovered or changed and is independent of any future costs a business may incur. Since decision-making only affects the future course of business, sunk costs should be irrelevant in the decision-making process. Instead, a decision

Why would a company perform a reverse stock split?

July 9, 2024 No Comments

A: A company performs a reverse stock split to boost its stock price by decreasing the number of shares outstanding, which typically leads to an increase in the price per share. How a Reverse Split Works When a company does a reverse split, it cancels its current outstanding stock and distributes

Why do analysts sometimes give an overweight recommendation on a stock?

July 9, 2024 No Comments

A: Financial analysts give their opinions of the future performance of a security. They can give performance ratings of underweight, overweight and market perform to a security. If analysts give a stock an overweight rating, they expect the stock to outperform its industry in the

Will getting a student loan deferral hurt my credit score?

July 9, 2024 No Comments

A: A student loan deferral lets you postpone making payments on your student loan for a period of time. Your lender may approve your deferral request under a number of circumstances, including but not limited to temporary total disability, public service (e.g., the Peace Corps

Why do companies use reverse/forward stock splits?

July 9, 2024 No Comments

A: Companies will use reverse/forward stock splits mainly in an attempt to save future administrative costs. A reverse/forward stock split involves two corporate actions: first, the company will perform a reverse stock split, and will immediately follow with a forward stock split. The purpose of

Why do shareholders need financial statements?

July 9, 2024 No Comments

A: Shareholders need financial statements to evaluate their equity investments and help them make informed decisions as to how to vote on corporate matters. When evaluating investments, shareholders are able to glean meaningful data found on financial statements. There are a number of tools shareholders

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