Which of the Following Reasons for Diversification Is Most Likely

question 65

Multiple Choice

Which of the following reasons for diversification is most likely to increase the firm's value?

• A)increasing managerial compensation
• B)reducing costs through business restructuring
• C)taking advantage of changes in tax laws
• D)conforming to antitrust regulation

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue.

Net Sales

The revenues from a company's primary activities after deducting returns, allowances, and discounts.

Working Capital Ratio

A financial metric measuring a company's ability to cover its short-term liabilities with its short-term assets.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered but not yet paid for.