Capitalized and Expensed Costs
Long-lived assets are assets that are expected to provide economic benefits over a future period of time; usually longer than one year. They include property, plant, and equipment (long-lived tangible assets); patents and trademarks (long-lived intangible assets); and investments in…
FCFF and FCFE Ratios
The cash flow statement can be used to compute financial ratios which measure a company’s profitability, performance, and financial strength. Other cash flow measures such as free cash flow to the firm, and free cash flow to equity, can also…
Describe the Business Cycle and Its Phases
A business or economic cycle is defined as the persistent fluctuation in the gross domestic product of a given economy within a specified period. A business cycle can be described by periods of expansion and recessions. During a recession, the…
Types and Measures of Unemployment
Unemployment happens when individuals who are capable and willing to work at the current wage rates cannot acquire jobs. Similarly, when there are few available jobs in an economy, and yet the labor force of that economy is growing, then…
Compare Inflation Measures, Including Their Uses and Limitations
[vsw id=”IP3HiHY1YA0″ source=”youtube” width=”611″ height=”344″ autoplay=”no”] There are two major measures of inflation: the consumer price index and the producer price index. Consumer Price Index (CPI) The consumer price index is an inflationary measure that considers using a consumption basket…
Economic Indicators, Their Uses and Limitations
Economic indicators are variables that give information about the condition of the economy. Generally, economic indicators are grouped according to whether they are leading (forward-looking), lagging (backward-looking), or coincident (simultaneous with the economy). Leading Indicators Leading indicators include share prices,…
Effects of Combined Changes in Aggregate Supply and Demand on the Economy
[vsw id=”cRMasYNNsVA” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Aggregate Demand Aggregate demand is the total demand for goods and services in an economy. It is defined as the sum of the amount spent on real goods and services by all economic agents….
Production Function Approach to Analyzing the Sources of Economic Growth
The production function (or Solow growth model) is used to determine the economy’s underlying source of growth. It attributes the growth of the gross domestic product (GDP) and productive capacity to: the application and discovery of new technologies that…
Value and Price of Forward and Futures Contracts
[vsw id=”0Geaej45v7w” source=”youtube” width=”611″ height=”344″ autoplay=”no”] By assessing the difference between the investors’ determination of the value of a stock or option versus the prevailing market price, investors can either buy or sell the asset to attempt to profit from…
Mechanisms to Manage Stakeholder Relationships and Mitigate Associated Risks
[vsw id=”KxjLLIVuAg0″ source=”youtube” width=”611″ height=”344″ autoplay=”no”] In seeking to balance stakeholder interests, a company may employ various mechanisms in stakeholder management. Common mechanisms include: holding general meetings, electing a board of directors, having an audit function, company reporting and transparency,…
