Which two questions must managers with a value- based focus ask if they are considering a poorly performing subsidiary?
A) Should cash be invested in other activities or given back to shareholders to invest elsewhere in the stock market?
B) How can cash be transferred from other parts of the firm to improve the figures?
C) How can the cash flow be increased?
D) Could greater wealth be generated by closure or selling the operation?

Question

Quizplus · Accepted Answer

A value-based focus emphasizes maximizing shareholder value. Therefore, managers would consider whether investing in other activities or returning cash to shareholders (A) could offer better returns than the current performance of the subsidiary. They would also evaluate whether closing or selling the poorly performing subsidiary (D) could potentially generate greater wealth, as this could reallocate resources more efficiently or eliminate losses.

Which Two Questions Must Managers with a Value- Based Focus