Which of the Following Is a Disadvantage of a Focus

question 6

Multiple Choice

Which of the following is a disadvantage of a focus on return on investment?

• A) It can encourage managers to focus on cost cutting efforts.
• B) It can produce a narrow focus on divisional profitability at the expense of profitability for the overall firm.
• C) It can encourage managers to cut inventories and reduce overall investment.
• D) It can encourage managers to focus on the long run at the expense of the short run.
• E) It can accomplish all of these disadvantages.

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Definitions:

Death

The cessation of all biological functions that sustain a living organism; not relevant in a financial context.

Liquidation Purposes

The process of converting assets into cash or cash equivalents by selling them in the event that a business is closing or reorganizing

Sale of Assets

The process of disposing of business assets, either tangible or intangible, in exchange for cash or other compensation.

Sheriff's Sale

A public auction of property repossessed by the government as a result of the owner's failure to comply with legal obligations, such as unpaid taxes or mortgage.