With an Unrelated Diversification Strategy, the Types of Companies That

question 12

Multiple Choice

With an unrelated diversification strategy, the types of companies that make particularly attractive acquisition targets are

• A) struggling companies with good turnaround potential, undervalued companies that can be acquired at a bargain price, and companies that have bright growth prospects but are short on investment capital.
• B) companies offering the biggest potential to reduce labor costs.
• C) cash cow businesses with excellent financial fit.
• D) companies that are market leaders in their respective industries.
• E) companies that employ the same basic type of competitive strategy as the parent corporation's existing businesses.

---

Definitions:

LIFO Periodic Inventory Method

An inventory valuation method where the last items purchased are the first items considered sold during a given period, calculated periodically.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated before any adjustments for cost of sales.

Perpetual Inventory System

A bookkeeping approach that instantly logs the sale or acquisition of stock using computerized point-of-sale systems and enterprise asset management programs.

FIFO

FIFO, or First-In, First-Out, is an inventory valuation method where goods produced or acquired first are sold, used, or disposed of first.