Quiz 5

Which of the following financial ratios typically indicates a company's efficiency in extending credit, as well as collecting debts?

receivables turnover

Univo Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus?

$200

By selling a television at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario?

$600

Which of the following is an advantage of accounting data?

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.

Blue Ace Autos Inc. and Ferdova Autos Inc. are two competing automobile companies. While Blue Ace Autos' Cost of goods sold/Revenue is 63.4 percent, the Cost of goods sold/Revenue of Ferdova Autos is 54.2 percent. What do you infer from this financial data?

Blue Ace Autos is less efficient than Ferdova Autos in producing goods.

Though the microwaves manufactured by BrightWave Inc. and MQ Electronics Inc. sell at the same price of $600 per unit, the economic value created by BrightWave Inc. is more than that of MQ Electronics Inc. In the context of this scenario, which of the following statements is true?

BrightWave has been able to gain an advantage over MQ Electronics through superior product differentiation.

_______ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it.

Consumer surplus

Which of the following is not a disadvantage of the balanced scorecard approach?

It fails to allow managers to prepare the company for future growth.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance?

It provides only limited guidance about which performance metrics to choose.

In the financial year 2014, Apple's return on revenue was 29.30 percent, and Microsoft's return on revenue was 32 percent. This implies that

Microsoft's return on revenue was higher than that of Apple.

The inventory turnover of Murdock Apparels Inc. is 102.6, and that of Lyons Couture Inc., a competitor, is 15.6. What do you infer from this financial data?

Murdock Apparels has lesser capital tied up in its inventory than Lyons Couture.

The payables turnover of Tesva Automobiles Inc. is 8.2, and that of its competitor, Mova Automobiles Inc., is 18.4. What does this financial data indicate?

Tesva Automobiles will be more efficient than Mova Automobiles in generating interest-free loans from suppliers.

When using the balanced scorecard approach to assess a firm's performance, which of the following is not a key question that managers need to answer?

What intangible assets do we need?

The tenet behind the triple bottom line is that

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

Pietro estimated that a pair of Style King jeans would be worth $50 for its brand and durability. However, at the Style King store, the pair of jeans he wanted was available for $40. The difference of $10 in this scenario is referred to as the

consumer surplus

The sum of consumer surplus and producer surplus for a good or service equals the

economic value created.

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the

efficient-market hypothesis.

Chat Room is an instant messaging mobile application. Initially, users were not charged. However, after a period of six months, the users had to pay for a fee to use the upgraded version of the application with advanced features. Which of the following business models does this best illustrate?

freemium

Economic contribution is created when the

price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

Higher ratios of receivables turnover indicate

shorter durations of interest-free loans to customers.