A Company Should Consider Downsizing When Products of an SBU

question 56

True/False

A company should consider downsizing when products of an SBU no longer fit the company's overall strategy.

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Definitions:

Intrinsic Value

The perceived or calculated true value of an asset, determined through fundamental analysis without reference to its market price.

ROE

Return On Equity, a profitability ratio that measures the ability of a firm to generate profits from its shareholders' investments in the company.

Required Return

The minimum expected return an investor demands to compensate for the risk of an investment.

Plowback Ratio

The proportion of earnings retained by a company rather than distributed to its shareholders as dividends.