Inside CHS Company, There Is a Culture of Frugality, Discipline

question 28

Multiple Choice

 Inside CHS Company, there is a culture of frugality, discipline, and efficiency. The firm pays its employees a competitive wage, but there are no perks. CHS Company is likely using a

• A) differentiation strategy.
• B) cost leadership strategy.
• C) differentiated focus strategy.
• D) stuck in the middle strategy.

---

Definitions:

Average Accounting Return (AAR)

A financial ratio that represents the average net income divided by the average book value of the investment over its life, typically used in capital budgeting.

Target AAR

Desired average annual return; a financial goal for the average rate of return over a specific period typically set by investors for their investment portfolio.

Profitability Index (PI)

The profitability index is a ratio that calculates the present value of future cash flows from an investment divided by the investment's initial cost, used to assess the desirability of a project.

Internal Rate Of Return (IRR)

A financial metric used to estimate the profitability of potential investments, calculated as the discount rate that makes the net present value (NPV) of all cash flows equal to zero.