CASE Scenario - Darla Davidson

question 92

Multiple Choice

CASE
Scenario - Darla Davidson
Darla Davidson was an executive with Digital Industries, a leading manufacturer of color televisions. She recognized that the color television market in the late 1970's was facing significant challenges. After two decades of highly successful development and marketing, the sales of color televisions had slowed and replacing older color television sets largely created her market.
-The strategy that the BCG matrix suggests that Darla should take for this SBU is

• A) invest and grow.
• B) liquidate while still profitable.
• C) ask her astrologer for advice.
• D) keep the SBU healthy and use its excess earnings to invest in other SBU's.
• E) divestiture.

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Definitions:

Ending Inventory

The total value of goods available for sale at the end of an accounting period, calculated by adding purchases to beginning inventory and subtracting cost of goods sold.

Net Purchases

The total amount spent on purchases of goods for resale after subtracting any purchase returns, allowances, and discounts.

Operating Expenses

Costs associated with running a business's day-to-day operations, excluding the cost of goods sold.

Income Summary

An account in which revenues and expenses are summarized, used in the closing process to prepare the accounts for the next period.