Aardvark Corp

question 105

Multiple Choice

Aardvark Corp. has three products. Two products together make up two-thirds of revenues and constitute 50 percent of company profits. Aardvark's third product makes up one third of sales. With profitability far above the industry average, this product is responsible for one half of Aardvark's profits. Which of the following statements regarding assessment of the general environment is accurate for Aardvark?

• A) The company should monitor the general environment for changes that might effect the revenue of all products.
• B) The company should monitor the general environment for changes that might effect the profitability of the most profitable products.
• C) The company should monitor the general environment for changes that might effect the profitability of all products.
• D) The company should monitor the general environment for changes that might effect the revenue and profitability of all products.

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Definitions:

Owner's Capital

The amount of equity in a company that is directly attributable to the owner(s), representing their stake in the company’s assets after liabilities have been subtracted.

Revenue

Income derived from the core business activities of a company, specifically through selling products or services.

Net Income

The residual financial benefit a company holds after reducing total income by all expenditures and tax payments.

Owner's Drawings Account

An account that tracks the funds withdrawn by the owner from the company for personal use.