Asked by Rachael Petersen on Apr 26, 2024
Verified
What is the primary source of decreasing expenses in a troubled company?
A) Advertising
B) Workforce reduction
C) Underutilized assets
D) Working capital
Decreasing Expenses
The process of reducing the costs incurred by a business in order to increase profitability.
Workforce Reduction
A strategy employed by businesses to decrease their number of employees through layoffs, attrition, or retirement schemes to cut costs or improve efficiency.
Underutilized Assets
Resources or assets that are not being used to their full potential within a business or organization.
- Realize the crucial importance of managing liquidity and assets when experiencing financial difficulties.
Verified Answer
KY
Katerina YanushefskiApr 28, 2024
Final Answer :
B
Explanation :
Workforce reduction is often the primary source of decreasing expenses in a troubled company as labor costs typically make up a significant portion of a business's expenses. By reducing the number of employees, a company can save on salaries, benefits, and other related costs. While underutilized assets and working capital can also contribute to decreasing expenses, they may not be as immediate or significant as reducing the workforce. Advertising is not typically a significant expense for troubled companies and may actually be necessary to attract new customers and increase revenue.
Learning Objectives
- Realize the crucial importance of managing liquidity and assets when experiencing financial difficulties.