Financial Policy Definition - 1469 Words

Amartuul Turbat Professor Fillenwarth Financial Policy 11 March 2011 The Definitions Question 1-2; (1-1.a.b.) Proprietorship: is the entity owned by an individual who is only founder and manager of the company. Even though it does not pay tax for located states, proprietorship’s profits or loses reports on its owners’ annual tax reports. Despite the fact that proprietorship is easy to form and has seldom government regulations, its term of operation is directly depending on its founder life time (Ehrhardt and Brigham 5). In addition on proprietorship, a partnership is more flexible type which is a business relationship between several individuals who are similar desires to obtain the profits from the partnership’s operation.†¦show more content†¦Question 1-3 Intrinsic value is the true value of the organizations which based on real position of market share, company’s assets, and perception of the future. This value can be same as market value if factors are same in the estimation process. On the other hand, intrinsic value may be different from market value depending on information used in evaluation. For example, if management hides negative information, market value might be higher than intrinsic values (Ehrhardt and Brigham 9). Question 1-4 Edmund Enterprises recently made a large investment to upgrade its technology. Even though this investment cannot improve the income in short-term, it can reduce the production cost. Therefore, in short-term investment cost will increase in the â€Å"Income Statement† because of the new investment; as a result profits will decrease and company’s earnings per share will decrease. However, in the financial markets, this news affects positively on stock’s market price. Also, this investment can raise the company’s intrinsic value since it can reduce the production costs (Ehrhardt and Brigham 30). Question 1-5 Capital can be transferred by the direct and indirect ways. In direct ways only two sides participate. Savers can make investment direct into business, and business sells their securities to savers without other parties. On the other hand, investment bank or financial intermediaries can participate effectively in transfers ofShow MoreRelatedHealth Policy : Allocative Policy Vs. Regulatory Policy1260 Words   |  6 Pages Healthy Policy: Allocative Policy Vs. Regulatory Policy Jaiden Mercer October 1, 2015 Dr. R Abstract: Healthcare policy is dynamic and ever changing, especially in our society today with the many changes in government control, insurance company influence, and actual delivery of healthcare services. In order to corral our healthcare system and ensure that there is quality control amongst all populations, health policies must be put in place. 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