Which of the Following Statements Regarding Diversification Analysis Is Most

question 315

Multiple Choice

Which of the following statements regarding diversification analysis is most accurate?

• A)Companies should only use diversification analysis if they are well-established;new companies that use this process run the risk of trying to do too much too soon.
• B)For any product,there is both a current and a new market;for any market,there is both a current and a new product.
• C)Most companies discover that there is at least one product that is targeted to the wrong market.
• D)Diversification analysis is only effective for consumer products.
• E)Diversification analysis is used to forecast and calculate industry sales for new products.

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Definitions:

Noncontrolling Interest

An ownership interest in a company that is less than 50%, usually reflected as a separate component of equity on a parent company’s balance sheet, representing the portion of its subsidiaries not owned by the parent.

Dividends

Distributions made from a company's earnings to its shareholders, typically in the form of cash.

Consolidated Statement

A financial report that combines the financial results of a parent company and its subsidiaries, presenting the financials as a single entity.

Consolidated Net Income

The total net income of a parent company and its subsidiaries after adjusting for inter-company transactions and minority interests, presented in consolidated financial statements.