A Firm That Produces Its Own Output Is Engaging in ______

question 31

Multiple Choice

A firm that produces its own output is engaging in ______ integration,while a firm that markets its own good is engaging in ______ integration.

• A)vertical; horizontal
• B)downstream; upstream
• C)forward; backward
• D)backward; forward

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Definitions:

SVA

Stands for Shareholder Value Added, which is a measure used to evaluate a company's ability to generate wealth for its shareholders beyond the required rate of return on their investment.

PV of Cash Flows

The present value of expected future cash flows discounted at the relevant rate, reflecting the current worth of those cash flows.

Residual Value

The estimated value that an asset will have at the end of its useful life, after depreciation has been accounted for.

EVA

Economic Value Added, a measure of a company's financial performance based on residual wealth calculated by deducting cost of capital from its operating profit.