strategic management chapter 5

For every dollar Tesva Systems puts to work, the company realizes 6.00 of sales.

*The working capital turnover of Tesva Systems Corp. is 6.0. What does this financial data suggest?

True Machine's gross profit margin is higher than that of One Electrona.

*True Machine Inc. and One Electrona Inc. are two competing consumer electronics companies. While True Machine's COGS/Revenue is 66%, One Electrona's is 74%. What do you infer from this financial data?

Book value

A firm's ________ captures the historical costs of a firm's assets minus accumulated depreciation.

Efficient-market hypothesis

All available information about a firm's past, current state, and expected future performance is embedded in the market price of a firm's stock. Therefore, a firm's share price provides an objective performance indictor.

Intangible

Assets such as innovation and quality are _____ assets that contribute to growth potential but are typically not included in a firm's book value.

Off-balance sheet items such as pension obligations

One of the drawbacks to the accounting profitability approach to measuring competitive advantage is that it does not consider:

Efficient-market hypothesis

The __________ is the idea that the market price of a firm's stock includes all publicly available information about a firm's performance.

strategy

The goal-directed actions a firm intends to take in its quest to gain and sustain a competitive advantage.

Total return to shareholders

The return on risk capital that includes the stock price appreciation plus dividends received over a specific period is: A. Total return on assets B. Normalized returns C. Total return to shareholders D. Capitalized returns

Tangible

The types of assets that are the primary focus of accounting data but are no longer most important to competitive advantage are:

It adjusts for size differences and provides a relative comparison

Under the accounting profitability framework to competitive advantage, comparing return on revenue (ROR) between companies is important because:

Stock market volatility

Under the shareholder value creation framework, ____________ makes it difficult to evaluate firm performance, particularly in the short term. A. Internal volatility B. Stock market volatility C. Value chain volatility D. Supplier volatility

Cost of goods sold/Inventory

Which of the following ratios best expresses inventory turnover?

Receivables turnover

_____ indicates how fast a firm is collecting the credit amount extended by a firm to its customers. A. Payables turnover B. Receivables turnover C. Assets turnover D. Inventory turnover

Return on revenue

_____ precisely indicates how much of a firm's sales is converted into profits.

Competitive advantage

defined and assessed at the firm level compared with competitors or the industry average.