Explain the Term Cost Leadership

question 63

Essay

Explain the term cost leadership. What are the possible ways through which a company would try to become a cost leader? How far is it desirable to implement cost reduction measures?

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Definitions:

Ratio Analysis

A financial analysis tool used to evaluate relationships among financial statement items to assess a company's performance and financial health.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets.

Ratio Manipulation

Ratio manipulation is the practice of altering financial figures or ratios in a company's financial statements in order to present a more favorable image of its financial health or performance.

Financial Leverage

The use of borrowed funds to increase the potential return on investment, amplifying both gains and losses.