Downscoping Represents a Reduction in the Number of a Firm's

question 86

True/False

Downscoping represents a reduction in the number of a firm's employees and sometimes in the number of its operating units, but it may or may not represent a change in the composition of businesses in the corporation's portfolio.

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Definitions:

Weighted Average Cost of Capital

Weighted Average Cost of Capital (WACC) is a calculation of a firm's cost of capital in which each category of capital is proportionately weighted.

Levered Cost of Capital

The cost of capital for a company that has debt in its capital structure, reflecting the additional risk introduced by the use of debt.

Debt-equity Ratio

A gauge for the relative amounts of shareholders' equity and debt in a company's asset financing approach.

Interest Tax Shield

The reduction in income taxes that results from taking the allowable interest expense deductions from taxable income.