CFA Level I · CFA Level I Exam · Business Models
A company sells a subscription analytics platform to mid-sized retailers. Its management describes who the customers are, what problem the platform solves for them, and how the company earns revenue from them. This description is best characterized as the company's:
The description is of a business model, which explains how a company creates value for customers, delivers it and earns revenue from it. Capital structure and dividend policy address financing and shareholder payouts, not customers, the problem solved or the revenue mechanism.
- Acapital structure
- Bbusiness modelCorrect
- Cdividend policy
Explanation
A business model describes how a company creates, delivers and captures value: who its customers are, what it offers them and how it earns revenue and profit. Capital structure concerns the debt and equity mix, and dividend policy concerns payouts to shareholders. Neither covers customers and value creation.
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