Which of the Following Statements Is True Regarding Companies That

question 44

Multiple Choice

Which of the following statements is true regarding companies that are not diversified?

• A)Such companies typically use quantitative measures of performance to evaluate managers.
• B)In such companies,top managers have less knowledge about managers below them in the hierarchy.
• C)In such companies,executives tend to focus on evaluating the objective performance results of their subordinate managers.
• D)They have evaluation systems that call for subjective performance assessments of managers.
• E)People above the first-level managers in the hierarchy of such companies have limited knowledge about work-related tasks that should be performed.

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Definitions:

Scrap Value

The estimated resale value of an asset at the end of its useful life, which is considered during the depreciation calculation of that asset.

Required Rate of Return

The minimum rate of return on an investment deemed acceptable by an investor, considering the investment's risk.

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculating the discount rate that makes the net present value of all cash flows equal to zero.

Payback Period

Payback period is the duration required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.