Informal plans are not recognized as true organizational plans and are rarely carried out by managers
Indicate whether the statement is true or false.
Answer: FALSE
Explanation: Informal plans can be highly effective and highly appropriate for some organizations, especially those that are small in size. As organizations increase in size, the need for formal planning tends to increase.
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Financial leverage has to do with
A) the usage of fixed cost financial securities to finance a portion of a firm's assets. B) a high gross profit margin. C) the incurrence of fixed operating costs in the firm's income stream. D) using common stock to finance a portion of a firm's assets.
Which of the following statements is FALSE?
A) Issuance costs increase the WACC. B) External equity is less expensive than retained earnings. C) A project that can be financed with internal funds will be less costly than the same project if it were financed with external funds. D) Issuance costs should be treated as cash outflows in NPV analysis.