Alfred Chandler Found That Firms Grow in a Predictable Pattern

question 58

Multiple Choice

Alfred Chandler found that firms grow in a predictable pattern and that the firm's growth patterns determine its structural form. Which form corresponds to the FINAL stage in Chandler's theory?

• A)functional
• B)simple
• C)vertically integrated
• D)multidivisional

---

Definitions:

Capital Markets

Financial markets where debt or equity-backed securities are traded, facilitating the raising of capital by companies and governments.

EBIT-EPS Analysis

A study conducted to determine the impact of debt on a company's earnings before interest and taxes (EBIT) and its earnings per share (EPS).

Leverage

The employ of various financial instruments or borrowed capital, like debt, to increase the potential return of an investment.

Degree of Financial Leverage

A measure that assesses the sensitivity of a company's earnings per share to fluctuations in its operating income, based on its use of fixed-cost financing.