Which of the Following Is a Disadvantage of Growth by Means

question 7

Multiple Choice

Which of the following is a disadvantage of growth by means of external growth strategies?

• A) Diversification of business risk
• B) Economies of scale
• C) Getting access to proprietary products or services
• D) Reducing competition
• E) Loss of organizational flexibility

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Definitions:

Payback Period

The time it takes for an investment to generate an amount of income or cash equal to the cost of the investment.

Net Cash Flow

The sum of all cash receipts minus all cash payments over a period, reflecting the company's liquidity position.

Payback Period Method

A capital budgeting technique that calculates the time needed for an investment to generate cash flows sufficient to recover the initial investment cost.

Capital Budgeting Decisions

The process of planning and evaluating investments in long-term assets, considering their potential to generate future profits.