Which Two Questions Must Managers with a Value- Based Focus

question 21

Multiple Choice

Which two questions must managers with a value- based focus ask if they are considering a poorly performing subsidiary?

• A) Should cash be invested in other activities or given back to shareholders to invest elsewhere in the stock market?
• B) How can cash be transferred from other parts of the firm to improve the figures?
• C) How can the cash flow be increased?
• D) Could greater wealth be generated by closure or selling the operation?

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Definitions:

Inputs

Inputs are the resources used in the production process to produce goods or services, including labor, capital, materials, and energy.

Capital Intensive

A description of industries or businesses that require large investments in capital assets to produce goods or services.

Variable Cost

Costs that change in proportion to the level of production or activity within a company.

Long Run

A time period in economics during which all inputs or factors of production can be varied, and no costs are fixed.