Which signal is most reliable before expanding an enterprise?
Answer and explanation
Correct answer: Consistent demand, profitable operations, and resource availability
Expansion increases fixed costs, operating responsibilities, and financial risk. Consistent demand shows that sales may continue, profitable operations indicate that the model can support growth, and available resources make implementation feasible. One unusually busy day or informal advice is insufficient evidence for a major expansion decision.
Frequently asked questions
What is the correct answer to this question?
Consistent demand, profitable operations, and resource availability
Why is this the correct answer?
Expansion increases fixed costs, operating responsibilities, and financial risk. Consistent demand shows that sales may continue, profitable operations indicate that the model can support growth, and available resources make implementation feasible. One unusually busy day or informal advice is insufficient evidence for a major expansion decision.
Which subject and chapter does this question cover?
This is a Class 12 Business Studies question. Chapter: Financial Management. Topic: Financial planning.
