From an accounting standpoint, stockholders' investment and revenues increase the assets of the company without adding to the liabilities. Therefore according to the equation (A = L + E), equity must increase.
Similarly, issuing dividends and paying expenses pays cash out of the company, which decreases assets without changing liabilities. Therefore equity must decrease.
Another way to think of it is: what contributes to the company's profit and/or value, and what decreases these things? Well, revenues and people investing in the company are good (and therefore good for stockholders), and giving cash out and paying expenses are costs to the company (and therefore decrease value for stockholders).
To handle products in the decline stage of the product life cycle, companies often use either a <u>divesting </u>strategy or a <u>harvesting </u>strategy.
The rate of decline is governed by means of two factors: the charge of alternate customer tastes and the fee at which new products are input into the market. Sony VCRs is an instance of a product within the decline degree. The call for VCRs has now been surpassed through the demand for DVDs and online streaming of content material.
Decline techniques are also known as protective techniques and are pursued when a business enterprise finds itself in an inclined position as a result of negative management, inefficiency, and ineffectiveness.
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