The Preferred Strategy for Cash Cows Is Stability or Modest

question 51

Multiple Choice

The preferred strategy for cash cows is stability or modest growth because:

• A)they produce large profits and a strong cash flow,but have little upside potential.
• B)they may not generate much profit at the moment,but have upside potential.
• C)the markets offer great growth opportunity given that they are new to the market.
• D)they are not only high performers in the present,but they offer similar potential for the future.
• E)they produce little if any profit,and must be supported so that they perform better.

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Definitions:

Withdrawals

Money or assets taken out of a business by its owner(s) for personal use.

Owner's Equity

The ownership stake of shareholders or owners in a company's assets once all debts have been subtracted.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period of time, resulting in a net profit or loss.

Capital Account

An account on the balance sheet representing the original investment by the owners plus any retained earnings.