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Multiple Choice
Business portfolio analysis is a technique used to ______.
A
evaluate a company's various businesses and allocate resources among them
B
calculate the depreciation of fixed assets
C
determine the tax liability of a corporation
D
prepare financial statements for external reporting
Verified step by step guidance
1
Understand the concept of business portfolio analysis: It is a strategic tool used by companies to evaluate their various business units or product lines based on their performance and market potential.
Recognize the purpose of business portfolio analysis: The primary goal is to allocate resources effectively among different business units to maximize overall profitability and growth.
Eliminate incorrect options: Business portfolio analysis is not related to calculating depreciation of fixed assets, determining tax liability, or preparing financial statements for external reporting. These are separate accounting or financial tasks.
Focus on the correct option: Business portfolio analysis evaluates a company's various businesses and helps in resource allocation decisions.
Relate the concept to practical application: Companies often use frameworks like the BCG Matrix or GE/McKinsey Matrix to perform business portfolio analysis and make strategic decisions.