Chap 5

T/F: All acctg data refers to the past

True

When one wants to further explore the difference in working capital turnover for two competitors, one can look at which of the following ratios? [ ] COGS/revenue turnover [ ] inventory turnover [ ] SG&A/revenue turnover [ ] receivable turnover [ ] fixed asset turnover [ ] payables turnover

[x] inventory turnover [x] receivables turnover [x] fixed assets turnover [x] payables turnover

When a company has a low payables turnover ratio, it indicates: [ ] LESS efficient management in paying creditors and generating interest-free loans from suppliers [ ] the firm has increased its number of invoices [ ] MORE efficient management in paying creditors and generating interest-free loans from suppliers

[x] more efficient management in paying creditors and generating interest-free loans from suppliers

To determine how efficiently a company can produce a good, managers look to the a. COGS/revenue ratio b. SG&A/Revenue ration c. R&D / revenue ratio d. COGS/inventory ratio

a. COGS/revenue ration

Off-balance sheet items ? a. pension obligation b. operating leases c. owned assets d. cash

a. pension obligation b. operating leases

According to the efficient-market hypothesis, information about which of the following is embedded in a stock price? a. a firm's political views b. expectations of the firm's future performance c. a firm's current state d. a firm's past

b, c, d expectations of the firm's future performance a firm's current state a firm's past

When a firm goes bankrupt, shareholders ___ a.can sue for losses b. cannot recover their risk capital c. are entitled only to a fraction of their investment d. are entitled to help pay off debtors owed money by the firm

b. cannot recover their risk capital

In order to be considered a legal owner of a company, a person or organization must a. be a member of the company's board of executives b. own a majority of the company's stock c. own at least one share of the company's stock d. own at least two products manufactured by the company

c. own at least one share of the company's stock

The firm's accounting profitability, ability to create shareholder value, and ability to generate economic value tend to be: a. unrealistically bound b. unrelated c. perpendicularly related d. correlated

d. correlated

Given that compared to the past the importance of intangibles has increased, the importance of the firm's book value has ____ as part of a firm's total stock market valuation a. stayed the same b. decreased c. increased

decreased

The money a shareholder spends for an equity share in a company is known as __ capital

risk

SG&A stands for sales, general, and _____

administrative

The primary reason for analyzing key financial ratios is to: a. allow top management teams to express their ideas b. determine whether the workforce is performing well c. assess competitive advantage d. assess future financial performance

c. assess competitive advantage

Federal laws require public companies to release detailed accounting data in order to enable ____ a. shareholder value creation b. a balanced scorecard system c. comparative analysis of firms d. economic value creation

c. comparative analysis of firms

When we consider the market valuation of Internet - based firms, such as a Facebook or Google, the importance of ____ becomes clear a. intangibles b. fixed assets c. tangibles d. plant and property

c. intangibles

Which of the following are among the most commonly used metrics for comparing the performance of different companies? [ ] return on invested capital [ ] return on strategic intent [ ] return on assets [ ] return on equity [ ] return on oppt

[x] return on invested capital [x] return on assets [x] return on equity

To determine a product's producer surplus, which of the following must be compared? [ ] the cost of production [ ] the number of products sold [ ] the overhead costs [ ] the price charged

[x] the cost of production [x] the price charged