Managing for Long-Run Profits as a Pricing Objective Implies That

question 180

Multiple Choice

Managing for long-run profits as a pricing objective implies that a company will

• A) give up immediate profit in exchange for achieving a higher market share in hopes of penetrating competitive markets.
• B) maintain a given price range to ensure there is no loss of customers over time, even if the profit margin declines.
• C) invest excess cash in bonds and certificates of deposit in order to counteract any inflationary economic changes in the future.
• D) reinvest all profits into market research or product research rather than returned to shareholders.
• E) drop all products, product lines, or divisions that cannot maintain their pricing goals.

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Definitions:

Operating Cash Inflow

Cash generated from a company's primary business activities, excluding financing or investment related transactions.

Straight-Line Depreciation

A method of allocating the cost of an asset evenly over its useful life, used for calculating depreciation expenses on the income statement.

Capital Budgeting

The process of planning and evaluating investments in long-term assets to determine which projects will generate the most profitable returns.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, making the expense predictable and consistent.