Observing the Pattern of Consolidation in U

question 49

Multiple Choice

Observing the pattern of consolidation in U.S.industries over time,one will notice that

• A)horizontal integration has never been a very popular strategy.
• B)firms that horizontally integrate tend to divest later.
• C)horizontal integration has been very popular in the last decade.
• D)while a few industries have consolidated since 1970,most remain fragmented.
• E)mergers were very common and acquisitions were rare from 1900 to 1999.

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Definitions:

Acid-Test Ratio

A financial metric used to gauge a company's liquidity by comparing its most liquid assets, without including inventory, to its current liabilities.

Profitability

This refers to the ability of a business to generate earnings as compared to its expenses over a specified period.

Liquidity

The ease with which assets can be converted into cash without significantly affecting their value.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over current liabilities.