Which of the following is not a limitation of the cyclical/non-cyclical descriptive approach to classifying companies?
A cyclical company may have a growth component in it.
Business-cycle sensitivity is a discrete phenomenon rather than a continuous spectrum.
A global company can experience economic expansion in one part of the world while experiencing recession in another part.
The statement “A cyclical company may have a growth component in it” is not a limitation of the cyclical/non-cyclical descriptive approach to classifying companies. Instead, it is an acknowledgment that companies can have characteristics that span multiple classifications.
The other two statements are limitations of the cyclical/non-cyclical approach. The second statement suggests that the classification of a company as cyclical or non-cyclical may not be a clear-cut distinction, but rather a matter of degree. The third statement highlights the fact that the economic conditions affecting a company can vary across different regions of the world, making it challenging to classify the company as purely cyclical or non-cyclical.