What Is the Primary Disadvantage of Rationalization

question 10

Multiple Choice

What is the primary disadvantage of rationalization?

• A) too much emphasis on centralized decision making
• B) potential profit loss due to different product designs
• C) too many different marketing and sales programs
• D) lack of differentiation and specialization for local markets

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Definitions:

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Creditors' Protection

Legal and financial mechanisms in place to ensure that creditors can reclaim some value from a borrower in case of default, insolvency, or bankruptcy.

Present Value

The immediate value of a prospective sum of money or stream of cash flows, using a specific interest rate for calculation.

Equivalent

A term expressing a state of equality or equivalency in value, function, or meaning.