business dynamics final
Khloe only purchases designer jeans and high-priced stilettos endorsed by her favorite entertainers. On top of that, her attitudes and values are shaped by specific statements made by these celebrities. She also supports causes and charities the celebrities endorse. This illustrates how consumer decision making is influenced by
a reference group
Which of the following is considered a step in the marketing research process?
defining the question and determining the present situation
A homeowner's insurance policy that includes a provision for __________ would provide the homeowner with enough cash to replace the items lost with new items.
guaranteed replacement cost
__________ refers to the strategy of using borrowed funds to increase the rate of return for stockholders.
leverage
The overall objective of financial planning is to
optimize the firm's profitability.
Annie, a marketing manager, is worried her firm is doing a poor job of managing the movement of finished products to the final consumer. If she is right, the company should work to improve its
outbound logistics.
Winter Cool Mints is a new brand of breath fresheners. The company knows product location is very important since consumers desire to buy this type product with a minimum of effort. Winter Cool Mints represent a
convenience good.
Orlando, a recent graduate of a community college, is about to make his first investment in the stock market. Which of the following would be a cautious way for Orlando to start investing?
index funds
When reviewing the balance sheet for Portable Pet Care, Inc., a mobile small animal care business, Ricky noted the following information: Company assets totaling $3.5 million, and liabilities totaling $1.3 million. On paper, the net worth (owners' equity) for this business =
$2.2 million.
A share of preferred stock for Marshall Manufacturing currently sells for $120. It offers the investor a dividend rate of 8%, on a par value of $100. If the investor owns 500 shares, her total annual dividend will equal
$4,000
Treetop Nursery offers customer credit terms of 2/15 net 30. This gives customers a
2 percent discount if they pay in fifteen days.
Cheryl is considering adding a rack of greeting cards to her product offerings at The Bitty Bookstore. Her fixed costs associated with adding the greeting cards would be $400. Variable costs per card are $1 each. The greeting cards will sell for $3 each. Helen's break-even point would occur at ________ cards sold.
200
As a bank loan officer, you are considering a loan application by Peak Performance Sporting Goods. The company has provided you with the following information from its balance sheet Cash $ 25,000 Account Receivable 45,000 Inventory 140,000 Fixed Assets 190,000 Current Liabilities 70,000 Long-Term Liabilities 90,000 Peak Performance's current ratio is:
3.0.
As a bank loan officer, you are considering a loan application by Peak Performance Sporting Goods. The company has provided you with the following information: Cash $ 25,000 Accounts Receivable 45,000 Inventory 140,000 Fixed Assets 190,000 Current Liabilities 70,000 Long-term Liabilities 90,000 Peak Performance's debt to owners' equity ratio (rounded to the nearest tenth of a percent) is:
66.7%
As a graphic artist, Randy has just finished a new calendar. The calendar cost him $1.00 for the glossy paper, $3.00 for the six color production, and $.50 for the plastic wire that holds it together at the top. The labor in developing the design was 4 hours of work at $50/hour, and labor is being added to the rest of the fixed costs of $500.00. At a price of $15.00 per calendar, how many calendars will Nate need to produce and sell in order to break even (cover all his costs, but not make a profit)?
67 calendars
Suppose that nine bakeries each tried to sell their products directly to eight supermarkets. The total number of exchange relationships that would be established is
72
Seedling Plant Science invented a drought resistant grass seed that only needs watering three times each year. In order to expand distribution worldwide, the company whose product produces lush green foliage needs a large amount of funding—fast! The handful of seed scientists that own the company decide to offer shares of stock to general investors. This first-time offering is a(n)
Initial Public Offering (IPO).
Withdrawals from a traditional IRA prior to the age of 59½ are
normally subject to a penalty and taxes on the income that is withdrawn from the IRA.
Day-by-Day Calendar Company's statement of cash flows showed the following activities for the year ended December 31, 2019: Cash from operating activities: $ 30,000 Cash from investing activities: − 15,000 Cash from financing activities: − 8,000 The year-end cash balance for this firm is:
$7,000.00
Kayla and Kingston run a shuttle service from Water Tower Place to Chicago O'Hare airport. Last month, they recorded the following: Revenues [20 trips @80 per trip] $ 2400 Fuel Charge [$30 per trip] 900 Banking expenses 20 Insurance expense 70 Van Depreciation 250 If 25% of their net income is paid to the government in taxes, what is their net income after taxes?
$870.00
Almost ___________ U.S. adults has accumulated enough money by retirement age to live comfortably.
1 in 10
Applying what you have learned about investments as introduced to you in Chapter 19, put the following investments in order from least risky to riskiest. Which of following lists begin with the least risky investment and ends with the most risky? Least risky = 1; most risky = 5.
1) Bonds; 2) Mutual Funds; 3) ETFs; 4) Preferred Stock; 5) Common Stock
Which of the following best represents an example of demographic segmentation?
A car manufacturer offers different types of cars designed to appeal to different age groups and income levels.
Tracy wants to start her own business, but knows little about how to set up an accounting system or interpret financial information. "I'm not worried about accounting," she tells her friends. "I'll just hire a part-time bookkeeper to handle all that type of stuff, and focus my attention on what I like—finding ways to satisfy my customers." Which of the following is the best response to Tracy's comments?
Although you can hire someone to keep your books, you'll still need to know how to read, understand, and interpret basic accounting reports in order to make good business decisions.
You have just calculated the acid-test ratio for Peak Performance Sporting Goods [acid test ratio = 1.0]. As a loan officer for the local bank, you are called into your boss's office to interpret the results of this ratio. Which of the following statements best reflects an understanding of these results?
An acid-test ratio = 1.0 tells us that without adequate inventory turnover, this company may represent a higher risk. Peak Performance's acid-test ratio shows that the firm maintains $1.00 in current assets for every $1.00 in current liabilities.
Blake took a marketing class at the local community college before starting his landscape business. He decided that his time would be better utilized in this class because if he could learn to sell his services well, the revenues and profits would follow. Your assessment of his plan might include which of the following?
Blake needs to realize that the ability to understand and interpret financial statements provided by his accountant might enhance his profits.
Pham, after years working with the consumer market, has just been transferred into a new job dealing with buyers in the B2B market. Which of the following correctly identifies a key difference Pham will likely notice between consumer markets and B2B markets?
Buyers in the business-to-business markets tend to be more rational than buyers in consumer markets.
Which of the following strategies provides an example of the most current era whose principles today's businesses are embracing?
Comfy Corner Hotels is all about the experience. Their goal is to make certain that every guest leaves their properties with a better feeling than when they first arrived. The CEO of Comfy Corner says, "We want you to think of our brand first when you make a hotel reservation."
___________ offer short-term secured loans to high-risk borrowers. These loans usually require collateral.
Commercial finance companies
Similar to the example of FIFO and LIFO inventory accounting methods in the text, a college store purchased sweatshirts for the upcoming fall semester. Using the following data, where a total of 100 sweatshirts were purchased by the store and placed in inventory, select the correct statement from the following choices. Inventory Purchase Date 8/1 50 sweatshirts Inventory Purchase Date 9/1 50 sweatshirts Cost Per Sweatshirt $12.00 Cost per Sweatshirt $14.00 Selling Price $28.00 Selling Price $28.00 Total Sweatshirts sold from 8/1 - 12/31 = 50 sweatshirts
FIFO would provide the most profit.
Which of the following statements is most accurate?
Financial managers need to understand accounting.
Which of the following statements about global advertising is most correct?
Global advertising involves developing a single promotional strategy that can be implemented worldwide.
________ insurance provides protection from losses of furniture, appliances, and clothes.
Homeowner's
Investors buying bonds and corporations issuing bonds (both) accept investment risk. Which of the following statements is most correct when it comes to the investment risks that one or the other party accepts?
If investor Joe is holding a bond that pays 5% and market interest rates on similar bonds go down, Joe's bond is now worth more than its face value, and if he needed to sell it on the secondary market, he could probably sell it at a premium.
What does a break-even point of 100 units mean to a firm?
If the firm sells 100 units, its total revenues will equal its total costs.
Pequeno Pesos Restaurants, Inc. is a chain of restaurants featuring authentic, affordable Mexican cuisine around the United States. The company is looking to expand its reach and to improve its menu. Which of the following is an example of secondary data the owners of Mucho Tacos might find useful?
Information published by the U.S. Bureau of the Census that identifies which regions of the United States are experiencing the most rapid growth in Mexican-American population
Cesar claims he found a definite way to save money, "Buy direct from the manufacturer. Any time intermediaries get involved, you'll pay a higher price. After all, every intermediary involved in the marketing process must charge enough to earn a profit." What do you make of Cesar's claim?
It is not valid in many cases. Intermediaries do add costs to products, but they also create value by performing marketing functions efficiently. In many cases the value they create more than offsets the costs they add.
The tax-sheltered program to encourage self-employed people to accumulate retirement funds is called a(n)
Keogh plan.
The company controller asked Jade to determine if it could borrow more money for an expansion project. When she calculated a leverage ratio, she determined that the company already had 1.5 times as much debt as equity. Do you agree with her assessment that the company should back off with borrowing more funds at this time?
Not necessarily. She should investigate the debt to equity ratios of other firms in the same industry.
Which of the following is an example of a consumer making a purchase through a direct marketing arrangement?
Patrick purchased a book on the history of the U.S. by sending in an order form attached to a pamphlet sent to the customer by the publisher.
Which of the following is a benefit of buying a home rather than renting?
Paying for a home is a good way to force yourself to save.
Peak Performance Sporting Goods Company has just applied for a bank loan in order to expand the business. Using the most recent balance sheet data provided by the company owner, you calculate that the company's current ratio is 2.5. In your presentation to the company boss, you remark
Peak Performance has $2.50 of current assets for each $1.00 of current liabilities.
Currently, which of the following products would most likely be considered in the growth stage of the product life cycle?
VR games
The concept time value of money indicates
a dollar received today is worth more than a dollar received a year from today.
Ivy is a bookkeeper for the Newport Corporation. She takes the firm's transactions and records them in a record book or computer program referred to as
a journal
Iron Age Metalworks, known for its very generous dividend policy, easily attracts investors. These dividend payments basically represent
a part of the firm's profit distributed to stockholders.
The disadvantages of issuing stock to obtain long-term financing include
a possible change in management and policies in the company.
Blake's client expressed her concerns and questioned some of the details of the sales proposal once he completed his sales presentation. An effective salesperson would
address her concerns and develop a better relationship.
Newport Processing promotes its services through Mechanical Engineers Today, a trade magazine that charges Newport and other companies $5,000 per page for ______________ to help offset the magazine's publishing costs.
advertising
Jessi ships various perishable flowers from her greenhouses near St. Louis to florists thousands of miles away in cities such as San Antonio, Seattle, and Hartford. Since the flowers must reach the florists as quickly as possible, the best mode of transportation for Jessi to use would be
air
Marshall Manufacturing acquired several pieces of expensive heavy machinery it intends to use in its operations. As an industrial good, this heavy machinery represents
an installation.
As the chief financial officer (CFO), you identify that your firm needs to raise additional funds by selling new shares of stock. Which of the following refers to a specialist that assists corporations in the issue and sale of new securities?
an investment banker
Damian, a recent college graduate with a degree in accounting, is helping a newly formed construction company set up its accounting system. Although the company had purchased accounting software, Damian wants to make certain that future reports will distinguish between current liabilities and long-term liabilities. In the future, he will need to know the amount of total current liabilities in order to
analyze whether the company has enough funds to pay the near-term bills.
Brody has just finished working on the balance sheet, income statement, and statement of cash flows for his company. The next step in the accounting cycle involves
analyzing the firm's financial statements to evaluate the financial condition of the firm.
Peak Performance Sporting Goods Company has reported net income after taxes = $3,750,000, with 18,250,000 shares outstanding. Basic Earning per Share for Peak Performance =
approximately $.21/share.
As Jaime was packing to return to college after his summer vacation, he realized that he owned many valuable things such as a laptop computer, a speaker system, and a Blu-ray player. An accountant would list all of these as Jaime's
assets
Buying _______ is often an attractive strategy for young couples, since they can live in one unit and rent the other half to supplement their income, while taking tax deductions on interest and real estate taxes.
attached homes
Fast Fine Foods markets some of its products to consumers looking for simple, quick meals. Fast Fine Foods also offers another line of products targeted to people interested in low-fat, high-nutrition foods. The company's strategy of dividing the market into groups that want similar things from the products they buy is an example of
benefit segmentation.
A _________ represents a long-term debt obligation issued by a corporation or a government.
bond
Teeny Toys hopes to raise long-term capital by promising in writing to repay the principal provided by potential creditors in ten years. Additionally, the certificate issued by Teeny Toys promises to pay 5% interest annually for the ten-year life of the security. Teeny Toys intends to issue
bonds
Engineers at Epic Electronics have designed a new smartphone ready to rival iPhone. The marketing department wants to find a way to identify the new phone in the minds of current smartphone consumers and differentiate it from products made by Epic's competitors. An important part of this effort is likely to be the selection of a __________ for the new phone.
brand name
Tony brings together buyers and sellers of used heavy construction equipment, and helps them negotiate the terms of the sale. However, he never takes title to any of the equipment himself, nor does he provide any financing for the buyer. Tony is acting as a
broker.
Long-term financing would normally be used to purchase
buildings
Textbook publishers use a packaging strategy known as ______________. Often the publisher will combine highly complementary products such as a new textbook and access code for online software that students can use to test themselves on new concepts and principles.
bundling
Brittany read about PharmaONE and wants to buy 100 common shares at $40 per share. Unfortunately, she only has $3,000 available to invest. One risky strategy Brittany could consider is
buying on margin
Which of the following shows a firm's spending plans on fixed assets such as large equipment?
capital budget
As a finance manager at Outdoor Adventure Sporting Goods, Roman worries about the firm's borrowing requirements for the upcoming year. He knows the benefit of estimating the company's cash disbursements and short-term investment expectations. Facing these concerns, a(n) ________ would provide Roman with valuable information by providing a good estimation of whether the firm will need to do short-term borrowing.
cash budget
A _________ forecast predicts the future cash inflows and outflows in future periods.
cash flow
Bailey is concerned because during the past four months her company has experienced difficulty in paying its bills on time. She knows if this continues, the firm will have difficulties in accomplishing its goals. What is Bailey concerned with?
cash flow
Brad is a real estate agent. He recently had an idea for a program to help perform appraisals more quickly and more accurately. He has a buddy who is a programmer that has helped him develop a detailed description of what the program will do and how it differs from existing apps. Now, Brad has taken this description and shown it to a number of fellow real estate agents to see if his idea appeals to them. What is Brad engaging in?
concept testing
The managers of Comfort Clothing regularly compare actual profits with the firm's projected profits. When deviations occur, the managers use the feedback to take corrective action when necessary. The management of Comfort Clothing is exercising financial
control
The rate of return a company must earn to meet the demands of its lenders and expectations of its equity holders is called
cost of capital
Although best used as a last resort, many small businesses find it convenient to use __________ as a short-term source of financing. Although this form of short-term debt comes with high interest rates, it provides a quick line of credit for many firms, including start-up companies who may not be able to secure bank loans.
credit cards
At the time the Bieg Plumbing Suppliers prepared its financial statements, it had several customers who bought goods over the past three months on its "90 days same as cash" credit plan. These customers had not yet paid their bills, but they have good credit ratings and Bieg is confident that they will make their payments on time. The amount these credit customers owe would show up as part of the
current assets listed on Bieg's balance sheet.
Sun Smarts Solar installs solar panels in large newly constructed buildings. The company employs several expert installers who work on a full-time basis. Although the installation team works every day, the company pays them at the end of the month, for the previous month's work. Employee salaries are recorded as ___________ on Sun Smarts's balance sheet.
current liabilities
Betty's Blossoms Nursery's social media presence has taken the company a step in the right direction toward building relationships with its customers. Betty posts her weekly recommendations to followers and even provides supplier sources for all kinds of rare and hard to find plants and shrubs. Customers provide other customers with reviews and comments about various plants they purchased through Betty's Blossoms and can message Betty's team with any questions or comments. As an extension of customer relationship management, this company is practicing
customer-management relationship (CMR).
Alex is responsible for recording sales transactions at Perry Enterprises. Alex's company utilizes ______________________, to help minimize entry errors.
double-entry bookkeeping
Sears sells batteries under its own Diehard brand name even though another company actually produces these batteries. This is an example of a
dealer (private) brand.
Which of these is backed only by the reputation of the issuer?
debenture bonds
When Newport Industries renegotiated their loan agreement, they borrowed an additional $2 million. The new loan requires Liberty to repay the new amount in nine months. Liberty's activity represents ________ financing.
debt
Businesses acquire long-term financing from two major sources,
debt financing and equity financing.
Anjali's stockbroker called to inform her of a margin call that requires that she pay $1,000. This indicates that the value of Anjali's stock has
decreased
The number of workers paying into Social Security for each retiree receiving Social Security benefits is
decreasing
Donavan spent the day talking with a packaging company in Guam, a lighting specialist in Japan, a touchpad expert in the U.S., a prototype design firm in Malaysia, as well as a shipping firm in China. Each of these firms provided expertise in the development of his company's latest product, a back-lighted eReader. The strategy that Donavan's firm used to develop its latest product is
distributed product development.
Greg purchased 2,000 shares of common stock of the Rite Track Corporation last year. He learned several months later that the stock does not pay a dividend. Greg should proceed to
do the proper research before he invests.
Financial planning begins with
earning money
Marco is a marketing manager for Securities Services. He has been looking at a variety of factors, such as technological, sociocultural, and economic trends as well as competitive conditions. Marco is confident that these factors will impact Securities' future marketing success. What are his efforts an example of?
environmental scanning
Green Goddess Lawncare, Inc., has enjoyed growing profits for 10 years. When new-product development made it feasible for underground sprinkling systems to be installed at a reasonable price, business soared. Recently, through ________________ the owner of Green Goddess learned about a seed that only needs to be watered two times each year. This innovation could have serious consequences on healthy revenues and profits. The owner is analyzing the _________ environment in order to remain knowledgeable about new trends that may affect his business
environmental scanning; technological
Diamond Motor Car Company produces some of the most luxurious and expensive cars in the world. Typically, only a single dealership is authorized to sell its cars in certain major cities. In less populous areas, Diamond authorizes a single dealer for an entire state or region. The manufacturer of Diamond automobiles is using a(n) ___________ distribution strategy for its product.
exclusive
After developing a new jewelry design, Christina and Julee were fortunate to get the attention of a large online retailer. The retailer was willing to fund the production of the jewelry abroad, as long as the designers agreed to sell their design through its outlets for the first two years. The retailer was asking Christina and Julee to agree to
exclusive distribution.
Gemstone Jewelers obtains needed short-term funds by selling its accounts receivable to the Friendly Finance Company. Friendly Finance usually pays Gemstone about 80% of the value of the receivables. Gemstone Jewelers utilizes ________ as a means of raising short-term funds.
factoring
Selling accounts receivable to obtain short-term funds is called
factoring
_____________ is the function in business that is responsible for acquiring funds for the firm, and managing funds within the firm.
finance
Valeria, owner of Coolest Closet, has applied for a business loan. Her prospective banker has requested information concerning the financial condition of her business. Which accounting discipline is responsible for providing accounting information to outside stakeholders?
financial accounting
Marcus, a management consultant, knows that regardless of how good his firm's product might be, the business has little chance of success without a(n)
financial plan
The first step in the financial planning process is
forecasting financial needs.
At Baumann's Fine Meats, the butchers will hand cut steaks to the thickness their customers specify and trim off the excess fat. This extra service provides ________ utility.
form
An advertisement for the Xerox Corporation encourages customers to say, "Copy it" rather than "Xerox it." This indicates that Xerox is fearful that its brand name might become a(n)
generic name.
The goal of accumulating capital is to allow an individual to
have funds available to invest.
The path to success in a capitalist system is to
have money to invest
Diego owns and operates a small business with only four full-time employees and less than $700,000 in annual sales. He currently uses a manual accounting system and relies on a part-time bookkeeper to keep his records in order. In evaluating the possible adoption of a computerized accounting system, Diego will probably discover that
he could benefit from adopting such a system, but should also consult with an accountant for advice about what's best.
________ insurance provides protection from the cost of medical care for illnesses and injuries.
health
Since commercial finance companies offer loans to higher-risk customers than commercial banks, the interest rates they charge are usually ________ than rates charged by banks.
higher
The new issue $1,000 face value bonds due in 2030 issued by Bathtub Brewing Company are seen by investors as less attractive than other bonds offered by other businesses at the same time. The coupon rate attached to these bonds will need to be __________ than other corporate bond issues in order to attract investors.
higher
The terms of the agreement in a bond issue are referred to as the
indenture terms
The Securities and Exchange Commission has accused Martha of benefiting unfairly from information secured from a corporate officer of Stewart Engineering. Because Martha used that information to profit in the stock market, she faces ________ charges.
insider trading
The management at GameGuys, Inc. designed a strategy that unifies advertising, personal selling, public relations, and sales promotion activities creating a consistent message. This effort to promote a positive brand image represents a(n) ________ program.
integrated marketing communication
Zara is the publisher of "Luxe Ladies Magazine," which is a publication targeted to Millennial and Gen Z women. Because it is a small, new publication, some of the larger bookstores, convenience stores, and newsstands are not agreeing to distribute the magazine. Zara is very concerned by this trend, because she believes that her publication, like most magazines, needs ____________ distribution in order to succeed.
intensive
Epic Electronics' promotional efforts are intended to increase the public's awareness of its new product's benefits and uses. This effort is consistent with the ________ stage of the product life cycle model.
introduction
Music Masters sells a unique assortment of sheet music including just about any published music ever written before 1970. Its customers are high school and college band directors and choir directors who require several copies of the same music, including music written for a variety of instruments. To buy inventory for resale, the business seeks out wholesalers with large inventories. Due to the fact that cash flow is always an important concern, the owner keeps a watchful eye on how quickly various genres of sheet music sell. To help him in this assessment, which of the following ratios would be an important part of this company's financial analysis?
inventory turnover ratio
Marketing managers at Focal Point Cameras are looking for ways to cut costs as the company is facing intense competitive pressure. They are considering a plan to cut distribution costs by eliminating marketing intermediaries from the channel of distribution. If Focal Point does this, it is likely to find that
it will be unable to perform the functions as efficiently as they were performed by the marketing intermediaries.
Fairlawn Partners Consulting is a management-consulting firm that provides its expertise to businesses that employ its services. Since it does not hold an inventory of goods or produce any goods itself
its gross profit could be identical to its net revenue.
Chloe is categorizing journal entries in order to post to the ________.
ledger
Ivan will graduate from Great State University this year. He has accumulated $39,000 in student loans during his four years at college. An accountant would classify the loans as
liabilities
Bigbux Savings and Loan agreed to extend Appleman's Orchards $250,000 of unsecured short-term funds, contingent upon the bank having the funds available. This arrangement represents a
line of credit
The financial manager of Picture Perfect Graphics negotiated a ________ with her bank that allows Picture Perfect to borrow up to $75,000 without collateral. This arrangement eliminates the need to renegotiate the terms of the loan and complete new paperwork each time Picture Perfect borrows money. The preapproved short-term loan agreement is contingent upon the bank having the funds available.
line of credit
Your firm is a supplier to a major chain of discount stores. You have heard rumors that this chain of discount stores is struggling financially. Which financial ratios would indicate the discount store's ability or inability to pay its short-term debts?
liquidity ratios
We would expect the inventory turnover ratio for a ski shop to be _______ than the turnover for a convenience store.
lower
When Portable Pet Care, a mobile veterinary company, first started operations, it extended three months of credit to customers. It soon began to experience a cash flow problem. A finance professional was hired to
manage accounts receivable.
Calvin works in the accounting department for a textbook publishing firm preparing budgets and reporting production costs. What job does Calvin hold?
managerial accountant
Several years ago, Canadian Sam Holman realized there may be a need for a stronger, more durable wood baseball bat. He went through the process of developing the SamBat, a maple bat of precise dimensions. He set a price with a reasonable margin, he decided to take special orders and sell bats directly from his garage, and he promoted the bat with sales calls to professional baseball camps, where ball players could sample the bat. In marketing terms, we recognize that Mr. Holman designed the
marketing mix
Jordan is working to find ways to better her company's movement of materials and goods from the warehouse to the factory floor. Jordan is looking into ways of making her firm's __________ more efficient.
materials handling
Which of the following is a form of term insurance that guarantees fixed premiums for the life of the policy?
multiyear level-premium insurance
Paige noted that she disbursed $7,847 in payments for operations in her travel agency and received $7,162 in cash receipts for services rendered. She had no cash receipts or disbursements from investments or financing activities. Thus, Paige had a
negative cash flow.
After years of using a mass marketing strategy, Precision Print Shop has responded to new competition from larger companies by focusing on small market segments that have been ignored by these competitors. Precision believes that by offering these market segments personalized customer service it can attract a loyal group of customers willing to pay premium prices. What is Precision's strategy known as?
niche marketing
Keepsake Collectibles focuses its marketing efforts on high-income buyers of unique collectible items. The firm realizes that the number of buyers in this segment of the collectible market is small. However, they are confident that this approach will be profitable since these buyers will pay premium prices for their unique products and superior customer service. Keepsake's approach is an example of:
niche marketing
Protectors' Insurance wants to build strong relationships with its customers and is looking to create a more interactive approach to advertising. Which of the following represents the preferred advertising medium to achieve their goal?
online
Through equity financing, stockholders become _________ of the firm.
owners
Microchippers Computer Company thinks it will make a splash with galaxy-themed laptop cover designs scheduled for release next year. The computers do not reveal any other feature differences from what Microchippers currently offers. This effort is an example of using ______________ to differentiate a product as new.
packaging
Melodic Music, Inc., recently offered bonds for sale to the public. The unsecured corporate bond paid interest of 8% to investors for the 20-year life of the bonds. Melodic Music is obligated to
pay interest semi-annually.
Barker Brothers Pens utilizes a strategy of low-priced pens to attract customers and discourage competition. This represents a _______ strategy.
penetration
Norman wants to supplement his current investments with a high-risk, low-priced security. Which of these best fits his strategy of high risk, low price and a potentially high rate of return?
penny stocks
Coolest Closet, a chain of retail clothing stores, wants to assure investors and other outsiders that its financial statements are accurate. One way to do so would be to hire a public accounting firm to
perform an independent audit
Electronics Emporium, a chain of stores that specializes in devices and gadgets incorporating cutting-edge technologies, has over 150 stores in large cities throughout the Southeast and Midwest. Electronics Emporium picked the locations of its stores so that most customers living in upper middle class and wealthy neighborhoods can get to a location in under 15 minutes. Electronics Emporium is providing its customers with
place utility
George works in the accounting department at the Green Goddess Lawn Services, where it is his job to record all transactions into journals. After completing this task, the next step in the accounting process is to
post the information to the ledger.
Worlds of Fun is preparing to open its newest theme park in Shanghai. Once open, the marketing department will be collecting lots of information on what customers want while they are at the park. The marketing research team for Worlds of Fun will create original surveys with targeted questions to help collect reliable information. This type of research is described by marketing professionals as the collection of
primary data.
Abel just graduated earned a bachelor's degree in accounting. He plans to go to work for the American Red Cross as an accountant. What job will Abel hold?
private accountant
Quinn is an accountant employed by CCDL Enterprises. Recently, she has spent much of her time working on defining measures of costs for the production department and checking to ensure that various departments are staying within their budgets. Quinn is a
private accountant whose work is mainly concerned with managerial accounting.
Borden, Inc. makes pasta, dairy items, and adhesives. These different types of products are referred to as Borden's
product mix.
The top managers of Pages and Pages Bookstores want to indicate to the firm's shareholders how effectively they have managed the company. Perhaps the most meaningful way to do this would be by reporting strong
profitability ratios
Bathtub Brewing Company's ________ relies heavily on advertising, personal selling, and a limited use of product sampling.
promotion mix
A benefit of using credit cards is that they
provide a record that makes it possible to keep track of purchases easily.
Operating in the southwestern states, PuddleJumper Airlines hopes to avoid entering the price war that currently is taking place between several airlines on the east coast. The best strategy to avoid severe price competition is to
provide frequent travelers the added value of special fringe benefits.
Outdoor Adventure, a company that designs and manufactures sportswear, focuses their marketing efforts on people who participate in strenuous outdoor activities such as running, hiking, and climbing. For example, the firm advertises heavily in Runner's World and Women's Running. Outdoor Adventure is using _________ factors to segment its market.
psychographic
Kimberly has been helping Jonah in preparing his personal income tax forms for a couple of years. Jonah's boss recommended Kimberly because she had done a good job setting up the company's new accounting system. Jonah is very satisfied with Kimberly's work and feels that the fees she charges are quite reasonable. Kimberly would be classified as a(n)
public accountant
Jasmine finished writing a news release about her company's new product. She intends to e-mail the message to local television and radio stations as well as newspapers in hope that they will find the information newsworthy and run a story about the product. Jasmine's efforts represent the firm's
public relations
Frontier Filmmakers advertises their movies during television shows that their target market typically watches. Frontier Filmmakers believes the best way of reaching its customers is through a ________ strategy.
pull
Kerry Cottage carries authentic Irish gifts and clothing. The company uses a good deal of television advertising and sales promotion activities to attract consumers to retail shops in search of its brand. What strategy is Kerry Cottage utilizing?
pull
The Maryland Department of Travel and Tourism promotes tourism in the state by sending travel agents and bus tour companies information about the state's many attractions. The hope is that by stimulating interest in tour and travel agents, they will in turn encourage their customers to visit Maryland. This example represents a ________ promotional strategy.
push
AutoPROS uses its website to target car parts stores and car owners and tell them of the benefits of using their long-lasting spark plugs. What strategy is AutoPROS using?
push and pull strategies
PharmaONE plans to use its computers to post information from journals to the ledger instantaneously. One obvious benefit of this technology is
readily available financial information.
Looking to increase its customer loyalty, management at Epic International has worked to create a personal dialogue with their customers. This dialogue will enable Epic to offer products that exactly meet their customers' needs and provide personalized service before and after the sale. What strategy does Epic International illustrate?
relationship marketing
Consumer research indicates that the public is very concerned about underage drinking. In response, Texas Brewing Company has created a website providing parents with information to help avoid underage drinking in their families. The firm also provides materials to retailers to help train their employees to avoid sales to minors. Publicizing these efforts:
represents a key step in a good public relations program.
After earning $50 million in net income, Marshall Manufacturing distributed $15 million in dividends to their stockholders. Marshall's board of directors decided to invest the remaining $35 million back into the business. This $35 million reinvestment of profits represents
retained earnings
Mallory is running an income statement on her QuickBooks computer accounting program. Which of the following accounts will be used to calculate gross profit?
revenues, cost of goods sold
Vandelay Industries has discovered a defect in one of its products that may result in injury to users. The company believes it must quickly develop and implement a recall program. It is likely that Vandelay soon will be placing a great deal of emphasis on
reverse logistics.
A less-established company, or a company with a high debt to equity ratio, would be considered a riskier investment to the lender. Which of the following principles attests to this axiom?
risk/return trade-off
At a recent baseball tournament, a local beer distributor gave free mugs to all adults with a paid admission. What is this an example of?
sales promotion
Bookbinder Books partnered with Amazon to offer a unique _________. If you purchase 1 of 12 paperback books published by Bookbinder, you can choose 1 of 12 Kindle versions for $3 (a much lower price than a regular Kindle version).
sales promotion
Colossal Choco Chipper is a new, gigantic chocolate chip cookie created by the Kookie Cookie Company. To create interest for the Colossal Choco Chipper, the company sent a free package of six cookies to selected homes along with a coupon. Kookie Cookie's activities represent
sales promotion
Though Miguel relies on his stockbroker to execute his buy and sell orders for shares of stock, he has found that the process of buying or selling a share of stock on a major stock exchange normally takes
seconds
Which of the following provides the buyer with collateral?
secured bond
A loan backed by collateral represents a(n)
secured loan
The Knot is an online company that helps people with the complex task of planning a wedding. Multiple vendors are recommended for things like flowers, caterers, wedding gowns, and more. Through The Knot, a couple can establish a website that acts as a registry. Once the couple is married, the website directs them to another site having to do with beginning married life. What type of utility or utilities is this site providing to its users?
service and information
The owners of Spokes Bicycle Shop worry that cash flow this winter may be insufficient to meet the current operating expenses. While they anticipate a surplus of cash inflow as warm weather approaches, they need funds now to meet the company's immediate obligations. The owners can best resolve cash flow concerns by obtaining ________ financing.
short-term
Finance managers spend the majority of their time managing
short-term financial needs.
Shopper's Choice Department Stores has fallen behind in payments to suppliers due to cash flow shortages. Some suppliers are withholding shipments to Shopper's Choice until they receive payments on overdue accounts. To meet their immediate needs, Shopper's Choice Department Stores should utilize
short-term financing.
Many financial experts advise that you set up a contingency fund equal to about ________ of your earnings and keep these funds in highly liquid accounts.
six months
Epic Electronics is considering a strategy to charge a very high introductory price for their automobile video theater. After identifying that their rival firms did not carry this new product, they chose this pricing strategy to achieve maximum profits. Epic Electronics has chosen a ________ strategy.
skimming
The simple IRA plans allow employees of ________ companies to contribute larger amounts than the traditional IRA.
small
Eliza, a collector of fine art, particularly loves paintings. She has been looking for an original Jackson Pollack painting for months and has said that she is willing to go to extraordinary efforts to acquire this painting for her collection. Clearly this painting represents a __________ good for Eliza.
specialty
As an accountant, Janice's responsibilities include
summarizing and interpreting financial information needed by her firm's managers.
Anderson works in the marketing department at Marshall Manufacturing. Much of his job involves managing the movement of materials, parts, and information from suppliers to his firm. He tries to coordinate these flows with his firm's factory processes and assists with the efficient movement of finished goods to final consumers. These activities suggest that Anderson's job responsibilities focus on
supply chain management.
Edwin, an employee at an auto assembly plant for a U.S. auto manufacturer, manages a group of employees who measure the quality of parts that arrive on rail cars from Mexico and other countries. As a receiver of auto parts from other suppliers, Edwin works in
supply chain management.
Diego's company was bidding on the construction of a new penguin display at a zoo. When putting together his bid, Diego began by determining what the zoo would be willing to pay for the structure, and then subtracting a reasonable profit for the company. The result would be the cost of production. For example: If price to zoo = $8 million, and company profit margin = $3 million, the cost to produce cannot exceed $5 million. [$8 million - $3 million = $5 million.] The demand-based pricing strategy in this example is called
target costing.
Jet Magazine focuses its marketing efforts on reaching young African Americans. The firm believes that they are positioned to profitably serve this group of consumers. Jet utilizes the strategy of:
target marketing
The earnings on a traditional IRA are
taxed as income when they are withdrawn after retirement.
Athleisure, Inc. sells athletic gear by sending customers a catalog nine times a year. The company has no retail stores or website, but offers a toll-free order number that operates 24 hours a day, 365 days a year. Athleisure, Inc. sells using a technique known as
telemarketing.
H2 O'Yeah has designed a water purification device that is drastically different and far superior to any product currently on the market. Although consumer response was positive to the idea of the new product, management wants to find out more before committing to full-scale production. The next step H2 O'Yeah's marketing department is likely to take is to:
test market the product among potential users.
Maggie owns 10% or 50,000 common shares of a small biotech company. Although she has enjoyed a lot of control, Maggie realizes that in order for the firm to acquire the funds to grow in a recessionary economy, it will need to issue more stock. Unless she and others exercise preemptive rights,
the new issue will dilute her ownership
Although you were not fortunate enough to get Tee Time Golf Resort stock as an IPO, you are still thinking about trying to add some to your portfolio. Last week when you mentioned it to your broker, he said that there are plenty of shares trading on ____________, but he wanted to send you the company's financial disclosures provided in the ______ before you finalize your decision.
the secondary market; prospectus
While reviewing the books at his firm, Colin noticed discrepancies between how the firm recorded revenues last year and how it elected to record revenues during the recent quarter of the current year. As a recent business graduate, Colin felt confident that the changes needed clarification. To get another opinion, Colin suggested to the company's controller that the firm solicit
the services of an independent auditor.
Businesses match their long-term capital needs to
their long-term goals and objectives.
Bill is reviewing the firms whose stocks have comprised the Dow Jones Industrial Average over the years. He discovers
these stocks change periodically as deemed appropriate.
One disadvantage of having credit cards for personal use is that
they can make it easy to pile up a large amount of debt quickly.
Rosalita's and Antonio's are Mexican restaurant chains. Each restaurant offers similar items on their menus. However, Antonio's restaurants are positioned in the market as elegant establishments with high prices. Rosalita's, on the other hand, are located in middle-class neighborhoods, with a casual atmosphere that welcomes families with young children. The prices at Rosalita's are in the moderate range. When evaluating the marketing strategies used by these restaurants, we can conclude that
they utilize product differentiation.
Rock Solid Concrete Company does not offer customers a cash discount for early payment of their accounts receivable. As a result, most customers wait to pay their bill on the last day before late penalties are charged. These customers apparently understand the
time value of money
Spokes sells high-quality bicycles and accessories. The store is known for a pleasant environment, friendly salespeople, and an excellent service department. All of these elements are part of the ___________ offered by Spokes.
total product offer
________ is a form of short-term financing. Businesses buy merchandise from their suppliers, but are not required to pay for their purchases until some future date.
trade credit
Which of the following is a primary area of concern for financial managers?
undercapitalization
Tee Time Golf Resort found that Jordan Spieth wants to put his name on golf course designs. However, for any course to be acceptable, it will cost at least $20 million to build. The plan is to purchase real estate for four new golf resorts. Proceeding with their venture, the owners have calculated that they will need approximately $100 million. But putting together an IPO is another matter. After meeting with their investment banker, they believe that investors will be willing to pay $22/share for the IPO. As the ___________ for this issue, the investment bank requires 3% of the revenues generated by the sale. Tee Time will need to issue _______ shares in order to have the $100 million they need to proceed with their plan.
underwriter; 6.25 million shares
When managing the promotion mix, marketers are utilizing technology to deliver important information directly to the customer. For example, during the spring planting season, Home Depot and Lowes added QR codes to plants. When scanned with a mobile app, customers could make better buying decisions. The code offered information on planting time, watering schedule, and other pertinent tips on each plant. Home Depot even ran a commercial to let its customers know how it was using technology to assist them with their spring planting decisions. Whether using new promotional methods or traditional promotional methods, Home Depot
utilized pull strategy because it directed its messages to consumers.
Starlight Movies markets its DVDs and Blu-rays online. Recently, Starlight adopted a new program that offers their current customers free rentals if they encourage their friends to visit Starlight's website. What does this promotional program represent?
viral marketing
One disadvantage of term life insurance is that
when renewed it usually is at a higher premium.
_________ is a form of life insurance that provides both a savings plan and pure insurance coverage.
whole life insurance
OfficePRO sells a variety of supplies to small businesses and local offices. The fact that it sells only to other firms and not consumers indicates that OfficePRO engages only in
wholesale sales
Selena owns and operates a Global Goods grocery store. Although her store is independently owned and operated, she has signed an agreement with over seventy stores in the Midwest to use a common name, participate in chain promotions, and cooperate with other stores in the chain. What is Selena's store a part of?
wholesaler-sponsored chain
Despite its name, Choco Central is located in a small shopping center far from customers. However, the company enjoys outstanding business because satisfied customers share their enjoyable experiences at Choco Central with their friends and relatives. Choco Central apparently benefits from positive
word of mouth
Tiffany recently received poor service at a local restaurant. After dinner, Tiffany made her complaints public by placing them online. What is this a form of?
word of mouth
Registration in Ms. McNick's classes reaches maximum enrollment quickly. Students register immediately online just to insure their seat in her class. One student summed it up: "Everyone's heard she is the best teacher on campus." Ms. McNick's classes benefit from
word-of-mouth promotion