Chapter 5 (test 2)

________ are best described as the value of the best forgone alternative use of the resources employed.

Opportunity costs

Unlike the financial ratios based on accounting data, total return to shareholders is

an external performance metric

The translation of strategy into action primarily takes place in a firm's

business model.

Which of the following competitively important assets is typically excluded from a firm's balance sheet?

customer experience

The ratio Cost of goods sold/Revenue indicates how efficiently a company can

produce a good

Return on risk capital primarily includes

stock price appreciation plus dividends received over a specific period

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is

$3 billion, that is, 30 million shares × $100

Which of the following is a disadvantage of the balanced-scorecard approach?

It provides limited guidance about which metrics to choose.

A firm incurs $400 to manufacture a television. In the market, customers are willing to pay a maximum of $600 for the television priced at $500. The difference of $200 ($600 minus $400) is the

economic value created

The difference between the price charged for a product and the cost to manufacture it is referred to as the

producer surplus