Average Ratios: Cash Period and Evolution
Balance Sheet Data (MP)
- (07) 25,700
- (08) 28,800
- (09) 27,900
Production in Progress
- 26,400
- 14,000
- 19,700
Finished Goods
- 28,500
- 30,000
- 36,500
Clients
- 36,000
- 28,000
- 88,000
Suppliers
- 21,700
- 26,500
- 40,640
Profit and Loss Data
- Sales Revenue: 1,050,600 / 881,900 / 900,000
- Raw Material Consumption: 624,800 / 435,700 / 462,540
Provisioning Period
Provisioning Period = (Average Balance of Raw Material Inventory / Raw Material Consumption) * 365
- 2008 Provisioning Period: [((28,800 + 25,700) / 2) / 435,700] * 365 = 22.83 days
- 2009 Provisioning
Product Differentiation: Strategies, Competition, and Value
Products can be differentiated in three primary ways: by style or type (e.g., food at fast-food outlets, clothing in a store), by location (closer or farther), or by quality. Consumers differentiate products based on their willingness to pay for better quality, allowing producers to offer low-quality, cheap options alongside high-quality, premium-priced products. Industries with differentiated products exhibit two key characteristics: competition among vendors and the advantage of diversity.
Competition
Economic Principles: Analysis of Market Dynamics and Firm Behavior
Economic Principles
Analyzing Production Effects on Income and Input Substitution (Hicks)
X = Y1 + Y2 compensates consumer income to maintain the new price level and initial utility.
Constant Returns to Scale
Scale is excludable and the rivals are faced with proportional increases for all the private factors. Output grows at the same rate.
Fixed Costs and Political Bargaining
If costs are fixed, average variable costs and average total costs, along with votes, determine the majority when deciding. Equal
Read MoreUnderstanding Amortization: Functions, Accounting Roles, and Financial Implications
Functions of Amortization
1) Juridical: Amortization accounts for the depreciation of fixed assets used in the production process. Without it, financial assessments would be inaccurate.
2) Economic: Amortization distributes the depreciation (consumption) of fixed assets over time. The total amount of this consumption is known at the end of the asset’s useful life.
3) Financial: Amortization ensures the availability of liquid assets for the renewal of fixed assets. It allows the entity to maintain its
Read MoreMonopolistic Competition: Key Characteristics
Features of Monopolistic Competition
1. Large Number of Sellers
There are a large number of firms selling closely related but not homogeneous products. Each firm acts independently and has a limited share of the market. Therefore, an individual firm has limited control over the market price. A large number of firms leads to competition in the market.
2. Product Differentiation
Each firm can exercise some degree of monopoly (despite a large number of sellers) through product differentiation. Product
Read MoreMacroeconomics: Key Concepts and Applications
1. Small Open Economy with Perfect Capital Mobility
Consider the case of a small open economy with perfect capital mobility. Suppose that the government raises public expenditure and taxation by the same amount. Starting from a long-run equilibrium, this policy will have the following long-run impact:
- c. A rise in the real exchange rate, a drop in net exports, and no change in GDP.
- d. None of the above answers is correct.
2. Negative Demand Shock in a Closed Economy
Consider a country that is hit by
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