Arm & Hammer Began as a Producer of Baking Soda

question 33

Multiple Choice

Arm & Hammer began as a producer of baking soda. Now the company manufactures detergents, deodorants, and fabric softeners under the Arm & Hammer brand name. Arm & Hammer uses a ________ strategy.

• A) brand extension
• B) product line contraction
• C) downward line stretch
• D) cannibalization
• E) cobranding

---

Definitions:

P/E Ratio

A valuation metric that compares a company's stock price to its earnings per share, indicating how much investors are willing to pay per dollar of earnings.

Present Value

The computed present value of a future monetary sum or cash flow sequence, utilizing an established rate of return.

Growth Opportunities

Potential scenarios or plans a business can embark on to increase profits, expand its operations, or enter new markets.

Abnormal Earnings

Income that deviates significantly from what is typical or expected, usually referring to profits significantly higher or lower than those typical for the industry or the company's history.