In Which Situation May a Company NOT Want to Maximize

question 53

Multiple Choice

In which situation may a company NOT want to maximize profit?

• A) A small business owner who sells a highly specialized product at a high price in order to compete with more established businesses in the area
• B) A family-owned company who has to decide who to hire between a family member and a highly qualified candidate
• C) A conglomerate with a highly streamlined supply chain who sells generic goods
• D) A corporation that has performed poorly in the last two quarters and is looking for new upper-management

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Definitions:

Raw Materials

Basic materials that are used in the production process of manufacturing goods, including metals, oil, grains, and other commodities.

Cash Discounts

Incentives offered by sellers to buyers for paying their invoices early, typically a percentage reduction in the invoice amount.

Cash Budget

A forecast of cash receipts and disbursements for the next planning period.

Pro Forma Statement

A financial statement based on hypothetical scenarios or assumptions, used for planning and decision-making purposes.