What Is the Relevance of Quantitatively Measuring the Competitive Strength

question 58

Essay

What is the relevance of quantitatively measuring the competitive strength of each business in a diversified company's business portfolio and determining which business units are strongest and weakest?

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Definitions:

Profit Test

An examination to determine the viability and profitability of a project, product, or business scenario.

Asset Test

A measure to determine a company's ability to quickly convert its assets into cash to cover short-term liabilities.

GAAP

A set of accounting standards and practices that are adhered to by companies to ensure consistency, reliability, and comparability of financial statements.

Segment Reporting

The practice of dividing a company's financial reports to show the performance of different areas of the business, such as geographical regions or product lines.