IIA CIA Challenge Exam IIA-CHAL-QISA Question # 23 Topic 3 Discussion

Investment Portfolio Terms:

Cash Cow: A business unit with a dominant market position in a mature, slow-growth industry that generates consistent positive cash flow and profits. It requires little investment to maintain its market position and provides funds for other investments.

Star: A business unit with a high market share in a fast-growing industry. It requires significant investment to maintain its position and support further growth.

Question Mark: A business unit with a low market share in a high-growth industry. It requires substantial investment to increase market share.

Dog: A business unit with a low market share in a slow-growth industry, generating minimal profit or loss.

Characteristics of a Cash Cow:

Dominant Position: The acquired organization has a strong market position.

Mature Industry: The industry is mature with slow growth.

Positive Financial Income: Consistently generates positive cash flow and profits, requiring minimal investment.

Investment Strategy:

Portfolio Management: Investors typically use cash cows to fund other investments, maintaining a balanced portfolio that supports growth while providing stable returns.

References:

The term "cash cow" accurately describes an organization with a dominant position in a mature, slow-growth industry that consistently generates positive financial income, fitting the investor’s description​​​​.