financial objectives Flashcards
1
Q
what is the formula for return on investment
A
return from investment / cost of investment X 100
2
Q
If the number comes out positive what doe sit mean for the business
A
- the business has strong capital management
- sign of efficiency
- ## able to compare projects
3
Q
what is capital structure a breakdown of
A
- debt capital & equity capital
4
Q
examples of debt capital
A
loan, debentures, bonds
5
Q
examples of equity capital
A
share capital/ retained profits
6
Q
what are the risks if a business is funded heavily by debt
A
- if interests increase = pressure on debt capital
- creditors become wary of giving too much creditors
