There Are Many Reasons Why Firms Need to Grow

question 100

Multiple Choice

There are many reasons why firms need to grow. Which of the following reasons is strongly influenced by economies of scale?

• A) increasing profits
• B) lowering costs
• C) reducing risk
• D) motivating managers

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Definitions:

Fundamental Analysis

Assessment of firm value that focuses on earnings and dividends prospects, expectations for future interest rates, and risk evaluation.

Earnings

The amount of money that a company makes during a specific period, usually defined as profit after all expenses have been subtracted from revenue.

Dividends

Payments made by a corporation to its shareholder members, typically a portion of the earnings decided by the board of directors.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in generating sales revenue from its assets.