Sports Finance Quiz 1 (T/F & Multiple Choice)

Under this sport franchise ownership model, __________ is the most common model of team ownership. a. Single Owner/Private Investor Model b. Multiple Owners/Private Investment Syndicate Model c. Multiple Owners/Publicly Traded Corporation Model d. Single Entity Model e. Distributed Club Ownership Model

B. Multiple Owners/Private Investment Syndicate Model

Which of the following is a profitability ratio that measures the percentage of an organization's total sales or revenues that was net profit or income? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e.Price-to-earnings ratio

B. Net Profit Margin

This type of financing includes charitable donations, either cash or in-kind, made to an organization and is the primary source or operating and investing income for major collegiate sports programs. a. Debt b. Equity c. Retained earnings d. Government e.Gift

E. Gift

Other than __________, sport leagues in the United States are subject to the Sherman Act. a. The National Football League b. The National Basketball League c. Major League Baseball d. The National Hockey League e. Major League Soccer

E. MLS

Which of the following is an estimate of how much money investors will pay for each dollar of the organization's earnings? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e.Price-to-earnings ratio

E. Price-to-earnings ratio

Three interrelated sectors exist within finance. Which of the following sectors focuses on security choices made by individual and institutional investors as portfolios are being built? a. Money and capital markets b. Investments c. Financial management d. Derivative trading e.None of the above

B. Investments

Three interrelated sectors exist within finance. The goal or outcome of those working in which of the following sectors is to acquire and secure funds to maximize shareholder wealth? a. Money and capital markets b. Investments c. Financial management d. Derivative trading e.None of the above

C. Financial Management

Which of the following measures the return rate an organization's owners or shareholders are receiving on their investments? a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e.Price-to-earnings ratio

C. Return on equity

Which financial statement tracks cash in and cash out of an organization over a specified period of time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e.None of the above

C. Statement of cash flows

Which ratio is an indication of whether an organization can meet its current liabilities―those due within a year―with its current assets? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e.Debt ratio

Current Ratio

T or F: Yankee Stadium was financed by the team using a form of equity financing.

False, PILOT Financing

T or F: The single entity structure is used by the MLB, NBA, NHL & NFL

False, these all use a distributed club ownership model

The __________ shows the organization's income over a specified period of time. a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e.None of the above

B. Income Statement

T or F: Distributed club ownership model leagues are sometimes structured as non-profit organizations.

True

T or F: The single entity structure is used by MLS

True

T or F: The sport industry relies on the discretionary income of spectators and participants.

True

T or F: The Gross Domestic Sports Product (GDSP) is the market value of a nation's output of sport-related goods and services in a given year.

True

T or F: The largest grouping of sport businesses is within NAICS 71, the Arts, Entertainment, and Recreation segment.

True

Which of the following is a picture or snapshot of the financial condition of an organization at a specific point in time? a. Balance sheet b. Income statement c. Statement of cash flows d. Budget e. None of the above

A. Balance Sheet

When an organization borrows money that must be paid back over time, usually with interest, what kind of financing is being used? a. Debt b. Equity c. Retained earnings d. Government e.Gift

A. Debt

Three interrelated sectors exist within finance. Which of the following includes securities markets, investment banking, insurance, and mutual fund management? a. Money and capital markets b. Investments c. Financial management d. Derivative trading e.None of the above

A. Money and capital markets

Typically, owners in a specific industry compete for wealth maximization. Owners in sport might not be interested in this goal. Rather, they may be interested in __________. a. Winning championships b. Seeking celebrity status c. Protecting a community asset d. All of the above e.None of the above

D. All of the above

For all sport and entertainment organizations, __________ financing may include land use, tax abatements, direct facility financing, and infrastructure improvements. a. Debt b. Equity c. Retained earnings d. Government e.Gift

D. Government

Which ratio measures how often an organization sells and replaces its inventory over a specified period of time? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e.Debt ratio

D. Inventory Turnover ratio

An estimation of an organization's worth according to the stock market is __________. a. Interest coverage ratio b. Net profit margin c. Return on equity d. Market value e.Price-to-earnings ratio

D. Market Value

Which ratio measures how an organization finances its operation with debt and equity? a. Current ratio b. Quick ratio c. Total asset turnover ratio d. Inventory turnover ratio e.Debt ratio

E. Debt Ratio

Of the following statements regarding the Arts, Entertainment, and Recreation segment (NAICS 71) of our economy, which of the following is true? a. The industry employs a large number of full-time workers and relatively few seasonal and part-time workers. b. Those working in the industry tend to be older than those working in other industries. c. Wages for those working in the industry tend to be higher than wages paid to those working in other industries. d. Almost all leisure time activities, including watching movies, are a part of this sector. e. Rising incomes and increasing leisure time over the next 10 years should lead to an increase in demand in this sector

E. Rising incomes and leisure time over the next 10 years should lead to an increase in demand in this sector.

T or F: Antitrust law applies to single-entity sport leagues. False

False

T or F: Gift financing is a minor source of operating income for major collegiate sports programs.

False

T or F: The sport industry is classified as an industry by the U.S. Census Bureau.

False