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(a) What is the “financial hockey stick?” (b) Is business investment mainly responsible for the shape...

(a) What is the “financial hockey stick?”

(b) Is business investment mainly responsible for the shape of the hockey stick? If not, what is?

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Answer #1

A)

Financial hockey stick refers to the growth chart of businesses which are characterized by rapid growth and cash inflows in the initial years, followed by sluggish and stable growth overtime.

This is majorly common for startups, which experience a boost in their growth rates in the starting years and eventually experience losses or sluggish growth.

B)

No, rather than business investment, consumer response, lack of innovative ideas or glitches in the sales process are some of the main reasons behind the hockey stick effect. Businesses are always ready to invest and grow, however low consumer response or glitches in their production or sales process lead to their falling growth.

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