In Judging the Attractiveness of the Businesses a Multi-Business Company

question 47

Multiple Choice

In judging the attractiveness of the businesses a multi-business company has diversified into,it is important to

• A) consider whether each industry the company has diversified into represents a good business for the company to be in.
• B) calculate industry attractiveness scores for each industry into which the company has diversified.
• C) consider the appeal of the whole group of industries in which the company has invested.
• D) consider to what extent the industries a company has invested in holds promise for attractive growth and profitability.
• E) All of these.

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Definitions:

Operating Activity

Transactions related to the primary activities of a business, such as purchasing inventory, selling goods or services, and paying salaries.

Financing Activity

Transactions related to raising or repaying capital, such as issuing stocks or borrowing loans.

Statement of Cash Flows

An accounting statement reflecting how shifts in balance sheet entries and earnings affect cash and cash equivalents, separated into areas of operating, investing, and financing.

Operating Activity

Activities directly related to the primary operations of a company, generating the main source of revenue and expenses.