Portfolio models are used to assist a firm in
A) achieving a portfolio of businesses.
B) unbalancing its portfolio of businesses.
C) achieving a balanced portfolio of businesses.
D) generating excess cash.

Question

Quizplus · Accepted Answer

Portfolio management is a method of (a) assessing the competitive position of a portfolio of businesses within a corporation, (b) suggesting strategic alternatives for each business, and (c) identifying priorities for the allocation of resources across the businesses. The key purpose of portfolio models is to assist a firm in achieving a balanced portfolio of businesses. This consists of businesses whose profitability, growth, and cash flow characteristics complement each other and adds up to a satisfactory overall corporate performance. Imbalance, for example, could be caused either by excessive cash generation with too few growth opportunities or by insufficient cash generation to fund the growth requirements in the portfolio.

Portfolio Models Are Used to Assist a Firm in