Economic question

• Diehard_89

  15 Nov 06, 01:51

  what are the 2 problems that iron ore companies may experience if the demand for their product is unstable?
• hobochua

  15 Nov 06, 02:36

  Over supply...and high fixed overheads.....
  Too much holding stocks
• Diehard_89

  15 Nov 06, 02:38

  Originally posted by hobochua:

  Over supply...and high fixed overheads.....
  Too much holding stocks

  ohh care to explain?
  
  sorry this is a question from 2002 and I am studying the new H1 syallabus so don't understand..what do you mean by high fixed overheads?
• FireIce

  15 Nov 06, 03:06

  Originally posted by Diehard_89:

  ohh care to explain?
  
  sorry this is a question from 2002 and I am studying the new H1 syallabus so don't understand..what do you mean by high fixed overheads?

  overheads are like rental, utilities, manpower, office inventory....oso include certain taxes, licensing payments and insurance......
  
  even if there are no operations or production, u still have to pay these........
• Phoebie

  15 Nov 06, 04:33

  Originally posted by Diehard_89:

  what are the 2 problems that iron ore companies may experience if the demand for their product is unstable?

  undervaluing and underappreciating of these mentioned companies, iron ore price decrease (if there's little or no buyers), aging stocks (if no or little buyers), cash flow problems etc