Which One of the Following Is Characteristic of a Firm

question 80

Multiple Choice

Which one of the following is characteristic of a firm that has chosen a captive company strategy?

• A) It is most appropriate for a company with a strong competitive position in a growing industry.
• B) The firm increases the scope of its functional activities.
• C) The firm gains a certainty of sales and production in return for becoming heavily dependent upon another firm for at least 75% of its sales.
• D) The captive company acts as an angel to another firm.
• E) It is the first phase for the company to execute a turnaround strategy.

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Definitions:

Ending Inventory

The worth of merchandise ready for sale when an accounting period concludes, determined by adding beginning inventory and purchases, then subtracting the cost of goods sold.

Retained Earnings

The cumulative amount of profits kept in a company after dividends are paid, used for reinvestment in the business or to pay down debt.

Comprehensive Income

The total change in equity for a reporting period other than from transactions with owners, including all revenues, gains, expenses, and losses.

Equity

The value of an owner's interest in a property or business, determined by subtracting liabilities from assets.