Management's Ranking of Business Units and Establishing a Priority for Resource

question 106

Multiple Choice

Management's ranking of business units and establishing a priority for resource allocation should

• A)always make the company's business units with strong resource strengths and competitive capabilities the central focus of funding initiatives.
• B)put business units with the brightest profit and growth prospects and solid strategic and resource fits at the top of the investment priority list.
• C)utilize activity-based costing and benchmarking to determine the funding needs of each business unit.
• D)first consider the strength of funding proposals presented by managers of each division or business unit.
• E)give priority for funding to cash hog businesses.

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Definitions:

New Stocks

Shares that have been recently issued to the public by a company, often through an initial public offering (IPO).

Bankruptcy

A legal proceeding involving a person or business that is unable to repay outstanding debts, leading to asset liquidation or debt reorganization.

Corporate Tax Rate

Corporate tax rate is the percentage of a corporation's profits that is paid to the government as tax.

Debt Ratio

The portion of assets financed by debt, showing the extent to which a company relies on borrowed funds for its operations.