Quiz Questions Review Flashcards
(20 cards)
Extraction cost per barrel of oil and revenue per square foot are _____ measures of perfromance
a. strategic
b. accounting
c. market
d. strategic and accounting
e. accounting and market
b. accounting
Which of the following is false about the common-size income statement
a. it displays every expense as a percent of net income
b. it displays gross profit as a percent
c. it allows analysts to compare expense and profits from year to year for the same firm
d. it displays revenue as 100%
e. none of the above are false (all true)
a. it displays every expense as a percent of net income
Which of the following is a true statement about the income statement
a. gross profit represents the profit remaining after the firm pays its fixed costs, which include SG&A, to name a few.
b. operating income will always be smaller than gross profit
c. it shows the assets and liabilities held by the firm
d, operating income represents the profit remaining after the firm pays its COGS
e. gross profit represents the profit remaining after the firm pays interest expenses and income tax expenses
b. operating income will always be smaller than gross profit
which of the following is false about the static model of strategy?
a. it is more appropriate of a strategizing tool for more predictable and non-dynamic industries
b. it assumes all the goals/ projects devised and created int he firm’s intended strategy can become realized by the firm’s management team
c. it does not modify the firm’s intended strategy once it is created
d. it does not run the risk of a value creating goal/ project becoming value destroying to the firm’s performance
e. C&D are both false statements about the static model of strategy
d. it does not run the risk of a value creating goal/ project becoming value destroying to the firm’s performance
Which of the following is a true statement about performance measures
a. accounting measures are more important to assess than strategic measures
b. strategic measures have no relationship/ connection to accounting measures
c. accounting measures are derived from the income statement, but not the balance sheet
d. market measures are less important to assess than strategic measures
e. accounting measures may include how an organization utilizes debt to fun its strategic initiatives
e. accounting measures may include how an organization utilizes debt to fun its strategic initiatives
Which of the following is a false statement about firm processes?
a. processes are also known as routines, behaviors and activities
b. a process is how a firm executes on an activity such as marketing
c. a process may need to be completely changed given a shift in the firm’s marketing environment
d. how a company innovates products for its customers is appropriately classified as a firm process
e. a firm radically changing a process is a sign of failed management
e. a firm radically changing a process is a sign of failed management
In order to have a true understanding of a firm when it comes to financial analysis, a strategist always starts by asking and answering what key question?
a. in what industries does the firm compete?
b. how does the firm generate revenue?
c. how profitable is the firm?
d. how many direct competitors does the firm have?
e. what is the composition of the firm’s assets
b. how does the firm generate revenue?
unrealized elements as discussed in the dynamic model of strategy are strategic initiatives __________ in the firm’s intended/ deliberate strategy and are ________ for the firm
a. not contained; value-neutral
b. not contained; value- enhancing
c. contained; value- destroying
d. contained; value -enhancing
e. not contained; value- destroying
c. contained; value- destroying
Which of the following is a false statement about strategic management and the external environment
a. all organizations will face changes in their external environment
b. a CEO must constantly evaluate the firm’s processes to determine if they are properly aligned for success given the external environment
c. shift/ change in a firm’s external environment means a firm must strategically respond, whether that shift is due to a fad or a trend
d. the best CEOs and their executive teams must understand that changes in the external environment will happen on an ongoing basis and thus require constant assessment of the firm’s strategy and its processes
e. none of the above are false (all true)
c. shift/ change in a firm’s external environment means a firm must strategically respond, whether that shift is due to a fad or a trend
which of the following is a false statement
a. strategies are created and deployed to accomplish organizational objectives
b. a firm’s CEO and her executive team will make strategic decisions today that will impact the firm no more than 18 months into the future
c. it is best to view the firm’s goals and objectives as the ends it wants to accomplisg
d. as a firm considers the goals it wants to reach in the future, it is imperative that the executive management team asks and answers the question “what is our business and what should it be?”
e. none of the above are false (all are true)
b. a firm’s CEO and her executive team will make strategic decisions today that will impact the firm no more than 18 months into the future
which of the following is a true statement about the inventory turnover measure of the accounts receivable turnover measure?
a. inventory turnover is a profitability measure
b. accounts receivable turnover is an asset utilization measure
c. inventory turnover is a crucial measure in some industries but has no real interpretive value in others
d. inventory turnover is reported as a multiple but AR turnover is not
e. both B & C are true
e. both B & C are true
a firm’s ability to cover its short term-liabilities with its short term assets is best measured as
a. current ratio
b. fixed asset turnover
c. inventory turnover
d. AR turnover
e. times interest earned ratio
a. current ratio
fixed asset turnover
a. is an asset utilization measure
b. is only calculated using net PPE
c. will always be higher than TAT
d. is a very important measure in industries with physical locations like restaurants, retailing and grocery stores
e. all of the above
e. all of the above
which of the following is a false statement
a. an increase in COGS as measured in total dollars automatically translates into a decrease in GPM
b. interest expense and taxation expenses impact OPM
c. all things equal, an increase in SG &A expenses on the common size income statement decreases OPM
d. A & B- both are false
e. A, B & C all three are false
d. A & B- both are false
Which of the following is a false statement?
a. all things equal, an increase in COGS on a common-size income statement leads to a decrease in the GPM
b. all things equal, an increase in the corporate tax rate will lead to a decrease in NPM
c. all things equal, a decrease in interest expenses on a common size income statement leads to an increase in OPM
d. GPM does not account for fixed costs like SG &A and R &D
e. none of the above - A,B,C and D are all true
c. all things equal, a decrease in interest expenses on a common size income statement leads to an increase in OPM
ROA is a firm’s ability to take its ________ and generate __________; and, then, preserve as many of those dollars into ____________.
a. assets; revenue; earnings
b. assets; receivables; earnings
c. liabilities; revenue; cash
d. equity; receivables; earnings
e. assets; revenue; cash
a. assets; revenue; earnings
calculating a TIE ratio using EBITDA vs EBIT is more appropriate when the firm has sizeable/ sig _________ expenses
a. D & A
b. R & D
c. interest
d. options A &C are correct
e. options A B C are correct
a. D & A
total asset turnover
a. is negatively impacted by increased in goodwill on the balance sheet
b. is positively impacted by increases in cash on the balance sheet
c. measures the firm’s ability to generate net income given its total assets
d. will always be higher than FAT
e. non of the above are accurate
a. is negatively impacted by increased in goodwill on the balance sheet
which of the following is a false statement?
a. the reason OPM> NPM is because NPM must take into account additional expenses like interest expenses and taxation expenses
b. interest expenses and taxation expenses are factored into NPM
c. all things equal, a decrease in R&D expenses on a common size income statement translates into an increase in OPM
d. if the corporate tax rate decreases, the firm will experience an increase in GPM
e. non of the above- A,B,C &D are all true statements
d. if the corporate tax rate decreases, the firm will experience an increase in GPM
Which is a false statement about the balance sheet?
a. it details the assets held by the firm and how those assets are funded
b. an asset on the balance sheet may be funded/ financed via debt or equity
c. the two most revenue producing assets are inventory and goodwill
d. PPR is not a current asset
e. unearned revenue is a liability
c. the two most revenue producing assets are inventory and goodwill
