Elmo Corp., a manufacturer of personal computers and printers, recently established an office furniture exporting business. This is an example of ________
A) niche marketing
B) local marketing
C) diversification
D) product adaptation
E) downsizing
C
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Westmoreland Company Following are selected data from Westmoreland Company's financial statements. 2017 2016 Current liabilities $230,000 $160,000 Long-term debt 120,000 320,000 Stockholders' equity 420,000 540,000 Cash payments for additions to plant and equipment 45,000 32,000 Net cash flow from operating activities 80,000 51,000 Interest and principal payments 12,000 8,000 Net operating cash
flows before interest and taxes 68,000 43,000 Net income 90,000 72,000 Interest expense 8,500 11,500 Income taxes 16,000 14,500 Dividends paid 15,000 30,000 Refer to the Westmoreland Company data. Westmoreland's debt-to-equity ratio for 2017 is: a. an indicator that Westmoreland Company's ability to meet current interest payments to creditors is increasing. b. increasing slightly from 2016 to 2017. c. an indicator that for every $1 of capital that stockholders provided, creditors provided $0.83. d. an indicator that Westmoreland Company has relied on stockholders for funds more in 2016 than in 2017.
Investors typically accept a lower risk-adjusted rate of return on debt capital than on equity capital because
a. debt is typically less risky because fixed claims bear less residual risk than equity claims. b. equity bears less residual risk than debt. c. equity capital costs are tax deductible. d. the yield to maturity on equity is inversely related to its market value
Firms frequently sign contracts promising to pay defined amounts in the future in return for future benefits. If the firm has not received past or current benefits, but will receive the benefits in the future, accounting treats the obligation as a(n) _____ contract and typically _____
a. contingent; does recognize a liability b. executory; does not recognize a liability c. executory; does recognize a liability d. contingent; does not recognize a liability e. future; does recognize a liability
A firm that successfully pursues a steeper-than-industry-average learning curve and manages costs down may still fail if, by underestimating a strong competitor, it fails to gain the added volume necessary for the learning curve to exist
Indicate whether the statement is true or false