If a Firm Gets Too Large, It Will Eventually Experience

question 66

True/False

If a firm gets too large, it will eventually experience both diseconomies of scale and an increase in costs associated with the learning-curve effect as cumulative volume of production grows.

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Definitions:

Net Income

The profit of a company after all expenses and taxes have been deducted from total revenue.

EBIT

Earnings Before Interest and Taxes, a firm's earnings metric, accounts for all operational expenses aside from interest and taxes.

Return on Equity Ratio

The return on equity ratio measures a company's profitability by revealing how much profit a company generates with the money shareholders have invested.

Total Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue by comparing sales with total assets.