Are companies with a negative return on equity (ROE) always a bad investment?

July 9, 2024 No Comments

A: Companies that report losses are more difficult to value than those that report consistent profits. Any metric that uses net income is basically nullified as an input when a company reports negative profits. Return on equity (ROE) is one such metric. However, not all

Are qualified dividends included in ordinary dividends?

July 9, 2024 No Comments

A: Qualified dividends are included with ordinary dividends in box 1a of the Internal Revenue Service Form 1099-DIV; the box includes all ordinary dividends earned from a particular stock. Box 1b shows the number of the dividends in box 1a that are qualified dividends. The

Are small cap companies more risky investments than large cap companies?

July 9, 2024 No Comments

A: Small cap companies tend to be riskier than large cap companies. They have more growth potential, and offer better returns, especially over the long term But they do not have the resources of large cap companies, making them more vulnerable to negative events and

Can I have more than three original Bills of Lading?

July 9, 2024 No Comments

A: There is no restriction on the number of bills of lading that can be issued, but the number issued must be stated on the bill. Three bills are standard – one for the shipper, one for the consignee, and one for the banker, broker

Why is social responsibility important in marketing?

July 7, 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 social responsibility important to a business?

July 7, 2024 No Comments

A: Social responsibility has become increasingly important to companies over the last several years. Whether it’s by empowering women, helping the environment, or trying to end poverty, more and more companies are incorporating social responsibility into their overall business strategy. The social issues may be local, national, or global, but

Why is the capital adequacy ratio important to shareholders?

July 7, 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 work in progress (WIP) considered a current asset in accounting?

July 7, 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 7, 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 buy back its own shares?

July 7, 2024 No Comments

A: Stock buybacks refer to the repurchasing of shares of stock by the company that issued them. A buyback occurs when the issuing company pays shareholders the market value per share and re-absorbs that portion of its ownership that was previously distributed among public and private

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