A Cash Cow Type of Business

question 72

Multiple Choice

A cash cow type of business

• A)generates unusually high profits and returns on equity investment.
• B)is so profitable that it has no long-term debt.
• C)generates positive cash flows over and above its internal requirements,thus providing a corporate parent with cash flows that can be used for financing new acquisitions,investing in cash hog businesses,funding share buyback programs,and/or paying dividends.
• D)is a business with such a strong competitive advantage that it generates big profits,big returns on investment,and big cash surpluses after dividends are paid.
• E)has good strategic fit with a cash hog business.

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Definitions:

Bureaucratic Inertia

Refers to the tendency of large, rigid bureaucracies to continue their policies even when their clients' needs change.

Bureaucratic Ritualism

The phenomenon in which bureaucratic organizations focus more on following strict procedures and rules than on achieving their actual goals, leading to inefficiency.

Rules and Regulations

Established guidelines and laws designed to govern behavior and ensure order within a society, organization, or system.

Reference Group

A reference group is composed of people against whom an individual evaluates his or her situation or conduct.