Which of the Following Statements Is an Advantage of Related

question 31

Multiple Choice

 Which of the following statements is an advantage of related diversification strategy?

• A) Related diversification strategy allows a firm to maintain several businesses that are not connected in any way.
• B) The sharing of resources is a key component of developing economies of scope and often increases a firm's competitive advantage.
• C) Related diversification strategies often achieve financial economies through the restructuring of business units.
• D) Related diversification strategy can allow a sick or dying company to use capital generated in a profitable division to prop it up for a short period of time.

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Definitions:

Operating Cycle

A measure of the time span between the purchase of inventory and the collection of cash from accounts receivable, highlighting the time taken for a business to turn its inventory into cash.

Current Liabilities

Short-term financial obligations a company must pay within a year, such as accounts payable, short-term loans, and accrued expenses.

Liquidation

The process of bringing a business to an end and distributing its assets to claimants, often occurring when a company is insolvent and unable to meet its financial obligations.

Operating Cycle

An operating cycle is the average period of time it takes for a business to convert its inventory into cash proceeds from sales.