One Problem with Becoming Too Large Is That Large Firms

question 66

Multiple Choice

One problem with becoming too large is that large firms:

• A) tend to have less market power.
• B) have less potential for economies of scale.
• C) become attractive takeover targets.
• D) usually increase bureaucratic controls.

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Definitions:

Gross Profit

The financial gain obtained after subtracting the cost of goods sold from total sales revenue.

Ratio

A quantitative relationship between two numbers, often used in financial analysis to assess performance, financial health, and operational efficiency.

Income Statement

A financial report that shows a company's revenues and expenses over a specified period of time, resulting in net profit or loss.

Vertical Analysis

A technique in analyzing financial statements, where each item in the primary categories of assets, liabilities, and equity on a balance sheet is expressed as a ratio of the overall category total.