BUS 1750 Terms

A frozen pizza producer estimates the price elasticity of their basic pepperoni pizza to be -1.5. They currently sell 1,900,000 pizzas per year at a price of $12.99 per pizza. If they raise the price of the pizza by $0.60, what would be the change in demand for the pizza?

-131,640

Given the following financial information for a company: $ in thousands Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Long-term Debt $701 $522 Other transactions: Dividends paid: $31 Purchase of Shares for Treasury: $58 What is the net impact on cash?

-268

Cincinnati Coffee Company estimates the price elasticity of its French roast whole bean coffee is -1.6. They currently sell 22,000 one-pound bags of coffee per year at a price of $9.99. If they lower the price of this coffee by $0.95, what would be the change in demand for the coffee?

-3,347

Given the following balance sheet information: Liabilities Current Liabilities Accounts Payable $47,684 Total Current Liabilities $47,684 Long Term Liabilities Bank Loan $234,669 Total Long Term Liabilities $234,669 Owner's Equity: $559,815 Calculate the Debt/Equity ratio.

0.5

Given the following financial information for a company: $ in millions Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Total Current Assets: $146 $170 Total Assets: $773 $871 Total Current Liabilities: $265 $341 Total Liabilities: $895 $943 What is the Current Ratio on December 31, 2023?

0.50

Given the following financial information for a company: $ in thousands Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Total Current Assets: $1,230 $1,484 Total Assets: $3,479 $3,698 Total Current Liabilities: $2,136 $2,576 Total Liabilities: $6,370 $6,537 What is the Current Ratio on December 31, 2023?

0.58

What are the steps you should follow and in what order when investing?

1 Invest in your company retirement plan. 2 Create an emergency fund. 3 Open a Roth IRA 4 Open a regular IRA or brokerage account.

Texas Twister Hot Sauce company wants to market a new Thai Chili Hot Sauce. They want a 12oz. bottle of the sauce to sell for $3.99 and have a gross margin of 56%. What must the cost of a bottle of Thai Chili Hot Sauce be to meet these targets?

1.76

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Thousands Net Sales Revenue: $ 14,808 Operating Income: $ 3,426 Interest Expense: $ 294 Income Taxes: $ 656 What is the Net Profit Margin for this company, expressed as a percentage?

16.7

Bobby's Bongos is designing a new entry-level set of Bongo Drums. The company targets a 44% gross margin on its products. They have estimated the cost of manufacturing the new entry-level Bongo Drum to be $95. If that is the case, what should the selling price be to generate the company's target gross margin?

169.64

Given the following financial statement information: Income Statement Net Income: $141,625 Depreciation Expense: $53,258 Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Accounts Receivable $23,726 $27,537 Total Inventory $73,419 $78,835 Accounts Payable $12,481 $16,967 Calculate the cash from operating activities.

190,142

Given the following balance sheet information: $ in millions Liabilities Current Liabilities Accounts Payable $125 Total Current Liabilities $125 Long-Term Liabilities Bank Loan $230 Total Long-Term Liabilities $230 Owner's Equity: $139

2.6

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Thousands Net Sales: $ 3,828 Cost of Goods Sold: $ 2,319 General & Admin: $391 Selling Expense: $219 Depreciation Exp. $134 What is the Operating Margin for this company, expressed as a percentage?

20

Given the following financial information for a company: $ in millions Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Long-term Debt $372 $790 Other transactions: Dividends paid: $139 Purchase of Shares for Treasury: $77 What is the net impact on cash?

202

You have received $2,500,000 as an inheritance from a distant relative. You want to spend some of the money now and invest a portion so that you will have $600,000 available for your retirement in 25 years. If you can earn 4% interest per year on this investment, how much of the inheritance must you invest now?

221,095

An entrepreneur is selling a natural shampoo with conditioner for $27 per bottle. Customers buy an average of 4 bottles per year. The gross margin on this product is 55%. It appears that the entrepreneur is able to retain 83% of her customers from one year to the next. Assuming a discount rate of 4%, what is her lifetime customer value?

235

Given the following Balance Sheet and Income Statement information: Balance Sheet Total Assets: $1,242,404 Total Liabilities: $566,582 Income Statement Earnings Before Income Tax: $210,468 Income Tax Expense: $42,499 What is the Return on Equity?

24.9

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Thousands Net Sales: $ 3,602 Cost of Goods Sold: $ 2,640 What is the Gross Margin for this company, expressed as a percentage?

27

You want to save money for a new car. You have budgeted $400 per month which you will invest at 5% per year. How much money will you have after 5 years?

27,316

Given the following Balance Sheet and Income Statement information: $ in thousands Balance Sheet Total Assets: $2,462 Total Liabilities: $1,140 Income Statement Earnings Before Income Tax: $464 Income Tax Expense: $92 What is the Return on Equity?

28.1

You currently have a balance of $5,000 and you pay an interest rate of 20% per year on the card. Your minimum payment is 3% of the statement balance. If you pay the minimum balance for 17 months, what will be your new balance?

3,945.71

Eko-Clean is developing a new, all natural general-purpose cleaner. The company targets a 50% gross margin on its products. They have estimated the cost of manufacturing the new cleaner to be $1.70. If that is the case, what should the selling price be to generate the company's target gross margin?

3.40

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Millions Operating Revenue: $ 19,283 Cost of Revenue: $ 8,499 General & Admin: $1,869 Selling Expense: $1,190 Depreciation Exp. $1,262 What is the Operating Margin for this company, expressed as a percentage?

33.5

You run a coffee shop that works very hard to cultivate regular customers. You want to provide some incentives to improve the retention rate for regular customers, and to do this you want to estimate the lifetime customer value of your current regular customers so you don't offer incentives that cost too much. You estimate that your regular customers spend an average of $3.60 per visit and visit an average of 100 times per year. The gross margin on the average customer purchase is 49%. The retention rate for customers is estimated to be 71%. The coffee shop uses a discount rate of 9% in evaluating investments. What is the current Lifetime Customer Value for a regular customer of the coffee shop?

330

Assets Current Assets Cash $35,730 Accounts Receivable $32,861 Inventory Finished Goods $56,071 Raw Materials $1,231 Supplies $1,835 Total Current Assets $127,728 Property, Plant & Equipment Equipment $14,375 Less: Accumulated Depreciation $2,588 Total Property, Plant & Equipment $11,787 Liabilities Current Liabilities Accounts Payable $13,618 Total Current Liabilities $13,618 Long Term Liabilities Bank Loan $88,229 Total Long Term Liabilities $88,229 What is the Owner's Equity?

37,668

Vertical Edge Entertainment is purchasing a new ride for $28,400. The company is using a service life of 5 years and a salvage value of $4,700. What is the monthly depreciation expense for this ride?

395

You expect to have $1,500,000 in your 401(k) retirement fund when you retire at age 65. You expect this fund to be able to earn 2% interest per year (compounded monthly). How much can you withdraw from this fund each month if you want the fund to last for exactly 35 years?

4,969

Flavors 'R Us provides flavorings to the food industry. They are purchasing a new emulsifier for $230,000. The company is using a service life of 5 years and a salvage value of $12,000. What is the annual depreciation expense for this piece of equipment?

43,600

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Millions Operating Revenue: $ 15,016 Cost of Revenue: $ 8,457 What is the Gross Margin for this company, expressed as a percentage?

43.7

Minnesota Tool Works is designing a new pneumatic nailer. The cost to manufacture the new design is estimated to be $74 and the target sales price is $155. What will the gross margin for this product be, expressed as a percent?

52.26

Vandaley Industries is planning to introduce a high-efficiency vacuum cleaner. The cost of the vacuum is $89 and they sell it for $189. What is the gross margin for this vacuum cleaner, expressed as a percentage?

52.91

Kamakaze Drums is designing a new entry-level drum set that they want to be able to sell for $999. They want to have a gross margin of 44%. What must the cost of the new drum set be to meet these targets?

559.44

Given the following financial statement information: $ in millions Income Statement Net Income: $556 Depreciation Expense: $57 Balance Sheet Dec. 31, 2022 Dec. 31, 2023 Accounts Receivable $43 $62 Total Inventory $103 $156 Accounts Payable $83 $102 Calculate the cash from operating activities.

560

You want to buy a vacation property in 7 years and you want to have $65,000 available for a downpayment. How much do you need to save each month if your savings earn 8% interest per year?

576

Given the following Income Statement Information: Consolidated Income Statement - USD ($) $ in Thousands Net Sales Revenue: $ 3,432,604 Operating Income: $ 376,972 Interest Expense: $ 76,976 Income Taxes: $ 66,880 What is the Net Profit Margin for this company, expressed as a percentage?

6.8

You have decided that you could save a significant amount of money riding your bike to work when the weather is good. You live in Wisconsin and estimate that the weather will be warm enough for biking 36 weeks per year. You won't bike when the forecast is for rain and you estimate rain in the forecast 1 day out of 5 per workday. You normally drive 7 miles to work each day (round trip). Assume it costs you $0.60 per mile to drive to work. How much will you save each year by riding your bike when the weather permits?

605

A trust fund has been set up for you that is currently worth $250,000. This trust fund has been invested in the Schwab 1000 index fund for you. You will be able to access these funds in 10 years. You believe the Schwab 1000 will have a return of 10% per year (assume annual compounding). If that is correct, what will what will your trust fund be worth in 10 years when you can start withdrawing funds?

648,436

You are planning for your retirement and want to be able to take a luxury vacation each year for 15 years after retiring. You want to have a lump sum that you can invest at 8% per year in a special account when you retire (assume annual compounding for simplicity). ,You want the fund to be completely spent after taking 15 vacations. If you plan to spend $9,000 for each vacation, how much money needs to be in this fund when you retire?

77,035

A company uses 1100 packages of fluorescent bulbs annually. It costs the company $34 to order and receive this product. The fluorescent bulbs costs $46.5 per package. The company uses a factor of 20% of the purchase price to determine the annual holding cost for this product. What is the Economic Order Quantity (EOQ)?

89.7 packages

$ in thousands Assets Current Assets Cash $2,730 Accounts Receivable $861 Inventory Finished Goods $567 Raw Materials $1,231 Supplies $335 Total Current Assets $5,724 Property, Plant & Equipment Equipment $4,375 Less: Accumulated Depreciation $2,588 Total Property, Plant & Equipment $6,963 Liabilities Current Liabilities Accounts Payable $902 Total Current Liabilities $902 Long Term Liabilities Bank Loan $2,494 Total Long Term Liabilities $2,494 What is the Owner's Equity?

9,291

A company uses 200 packages of AA batteries annually. It costs the company $50 to order and receive this product. The AA batteries costs $14.69 per package. The company uses a factor of 15% of the purchase price to determine the annual holding cost for this product. What is the Economic Order Quantity (EOQ)?

95.3 packages

Which of the following are valid arguments in favor of double taxation of company profit?

Companies are not required to pay dividends. Wealthy people can avoid taxes from large stock investments.

Select all items below that threaten the long term survival of a company according to Warren Buffett.

Complacency in responding to the changing business environment. Arrogance that leads to ignoring threats to core businesses. Bureaucracy that slows efforts to develop new products and services.

The three levels of leadership are:

Direct, Organizational, Strategic

Which of the following statements are challenges that resulted from the development of mass production of goods? Select all that apply.

Environmental pollution Poor working conditions Lack of customization of products

Angel investors never use their own funds to invest in startup companies.

False

Arrogance leaves business strategists free for honest self-assessment of their companies.

False

Because the forward movement of products through the supply chain does not include payments, accounting is not involved in the supply chain in any way.

False

Companies must never deviate from their strategy to stay in business and thrive.

False

Dave Ramsey's debt snowball involves paying your highest interest debts first regardless of balance.

False

Depreciation is a reduction in net income.

False

In a free market, companies compete for scarce resources, resulting in higher prices for the consumer.

False

Marketable securities are financial investments that can only be bought or sold in private transactions.

False

Most of the influencing techniques used by leaders require position power.

False

Product development is a continuous process but should never mean changing the fundamentals of a business.

False

There is a clear relationship between revenue and net profit margin.

False

Under U.S. regulations, corporate bonds cannot be issued by a company to provide financing.

False

Match the business function with its task in developing an in depth product proposal.

Identify potential sources for products, estimate pricing of raw materials and develop a preliminary manufacturing and distribution plan. (Supply Chain) Determine the technical feasibility of a product, identify needed technology and key specifications for the proposed product. (Engineering) Calculate a detailed analysis of the potential profit from the new product. (Finance) Examine the value proposition of the product using customer feedback, testing and product differentiation. (Marketing)

The three major actions in leadership are:

Influencing Improving Operating

Which of the following statements are true? (Select any that are true)

Macroeconomics looks at the global economy to make decisions about demand. Microeconomics generally focuses on how much control a government exerts on the marketplace. Macroeconomics focuses on the impact of decisions, typically by governments, on regional or national economies. Microeconomics generally looks at the impact of decisions on individuals and organizations.

Since the 1980s, the United States has maintained the price of sugar between 200% and 400% above the price in Canada and Mexico. The result (select all that apply):

Manufacturing facilities for products that use sugar have closed due to the higher raw material costs. Companies have moved to Canada or Mexico to obtain lower cost sugar for their products.

Select all the reports that companies use to report net income.

P&L Statement Income Statement Profit and Loss Statement Earnings Statement

Which type of power leads to the highest level of committment?

Referent

A good way to start managing your spending is to track all expenses for 3 months.

True

A statement of cash flows shows not only how much cash a company has over time but also why the cash fluctuates.q

True

According to Adam Smith's Invisible Hand concept, a desire by individuals and companies to earn profits leads to the production of products with increasing quality and technology at lower costs.

True

As the basis for large economies, bartering is inefficient and unwieldy.

True

Discounting cash flows is the process of evaluating financial transactions that have some component in the future.

True

Effective financial planning is important to making sure a business can grow and without running out of cash.

True

Employer sponsored tax-deferred savings plans, such as 401k plans, allow employees to save for retirement by investing part of their income and not paying taxes on the income or its earnings until they withdraw it in retirement.

True

Goals must be specific so that employees are clear as to what must be accomplished.

True

In the Business Analysis phase of product development, all areas of an organization develop an in-depth product proposal.

True

In the SMART concept, the 'S' refers to making goals specific.

True

Knowing all of your spending and expenses helps you identify places to cut.

True

Liquidity refers to how much cash ha company can come up with in a short period of time.

True

Profit orientation means the firm focuses on a developing products or services that better serve target customer needs while helping maximize the firm's profits over the long run.

True

SMART goals are often used by managers to keep phase 3 on track and on budget.

True

Square.com's moto, "Accept every way your customers want to pay," is an example of value proposition.

True

The International Financial Reporting Standards (IFRS) regulate accounting practices in many non-U.S countries.

True

The Value Proposition Canvas provides a framework for a company to better understand their customer's needs and direct the development of their offerings to meet those needs.

True

The business adage "You can't pay bills with accounts receivable" refers to the fact that while accounts receivable are shown as an asset on the balance sheet, it is not the same as cash.

True

The point where supply and demand curves intersect is called the equilibrium point.

True

The time value of money is the recognition that a dollar today i worth more than a dollar in the future.

True

The upstream portion of the supply chain includes the organization's suppliers and the processes for managing relationships with them.

True

To calculate the cost of goods sold (COGS), total all expenditures directly related to manufacturing or purchasing a product and making it available to customers.

True

To show the value of an aging asset on a balance sheet, the purchase price is listed along with the accumulated depreciation as well as the purchase price minus the accumulated depreciation

True

Trust is the foundation for personal, professional, and organizational success.

True

When listing liabilities on a balance sheet, current liabilities refer to what a company must pay within 1 year.

True

When products move forward through the supply chain, this triggers a backward flow of payments.

True

Workers willing to take jobs at lower wage than the minimum wage (for example, teenagers/high school students) are effectively prevented from taking jobs when the minimum wage law is implemented.

True

Which of the following are are factors that affect product timing decisions?

a) Market Forces b) Business Cycles c) Competition e) Technological Changes

What are the keys to making smart business investments?

a) Understanding the time value of money c) Managing risk

Peter Drucker reportedly said "Culture eats strategy for breakfast," indicating that

b) A bad company culture can ruin a good strategy.

Which of the following statements best describes the marketing function.

c) Marketing builds, maintains, and manages relationships through creating, communicating, delivering, and exchanging offerings that have value.

Why have many corporations moved away from defined benefit plans?

d) All of these

Which of the following are methods of reducing supply chain risk.

d) All of these.

Which of the following best descries the way in which a company can use its net income.

d) Pay out as dividends or build cash reserve.

In addition to stocks, the NASDAQ Composite index includes

e) All of these

Which statement below is an accurate portrayal of Michael E. Porter's Five Forces model

f) All of the above.

Which of the following makes precious metals a good choice as a material for money?

f) a, b and c