How does internal growth versus the infusion of new capital affect the original shareholders?
What will be an ideal response?
A company can grow in a variety of ways. It can become larger by borrowing money to invest in new projects.
Likewise, it can issue new stock for expansion. Managers can also acquire another company to merge with the existing
firm, which would increase the firm's assets. Although it can accurately be said that the firm has grown, the original
stockholders may or may not participate in this growth. Growth is realized through the infusion of new capital. The
firm size clearly increases, but unless the original investors increase their investment in the firm, they will own a
smaller portion of the expanded business. Another means of growing is internal growth, which requires that managers
retain some or all of the firm's profits for reinvestment in the firm, resulting in the growth of future earnings and,
hopefully, the value of the common stock. This process underlies the essence of potential growth for the firm's current
stockholders and is the primary relevant growth for our purpose of valuing a firm's common shares. We are not
arguing that the existing common stockholders never benefit from the use of external financing; however, such benefit
is nominal if capital markets are efficient.
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The performance of an excellent sales person should be rewarded with a promotion to management
Indicate whether the statement is true or false
Which of the following statements is not true about strategic human resource management?
a. The core HR functions should be consistent with business strategy and objectives b. The core HR functions can be transposed onto the formulation stage of business strategy to help the organization meet its strategic objectives c. The core HR function should formulate and drive the business strategy d. The core HR function can be transposed onto the implementation stage of business strategy
According to the United States Supreme Court in Miranda v. Arizona, an individual must be apprised of certain of his or her rights whenever the individual is
a. arraigned in a court. b. imprisoned in a jail. c. sentenced for a crime. d. taken into custody.
Using the data given in Table 14-2, what is the equilibrium market share?
A) (0.30, 0.60, 0.10) B) (0.55, 0.33, 0.12) C) (0.44, 0.43, 0.12 D) (0.55, 0.12, 0.33) E) (0.47, 0.40, 0.13)