6650 chapter 5 quiz

Economic contribution is created when the: revenue generated by selling a unit of a product is equal to the cost incurred by the firm in producing it. value a consumer attaches to a good or service is lesser than what he or she paid for it. price a customer is willing to pay for a good is less than what it costs the firm to manufacture it. price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

price a customer is willing to pay for a good or service is more than the cost the firm incurs to produce it.

Univo Corp. is a public company whose shares are currently trading in the market at $150 each. The company manufactures smartphones at the cost of $300 per unit and sells them in the market for $500 each. What is the company's producer surplus? $300 $150 $200 $650

$200

By selling a television at $1,200 for which consumers are willing to pay up to $1,300, a consumer electronics firm makes a profit of $500 per unit. What is the economic value created in this scenario? $600 $1300 $1200 $700

$600

Which of the following is an advantage of accounting data? Accounting profitability ratios not only show us the outcomes from past decisions, but also provide information to guarantee future performance. Accounting data focus mainly on intangible assets, which are more important than tangible assets in firms' stock market valuations. Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms. Accounting data consider off-balance sheet items, which makes comparing companies with different capital structures easy.

Accounting data can be easily transformed into financial ratios to help assess and evaluate the competitive performance of firms.

In the financial year 2012, Apple's return on revenue was 26.70% and BlackBerry's return on revenue was 6.30%. This implies that: Apple's return on revenue was higher than that of BlackBerry. BlackBerry was using its capital more efficiently to generate revenue than Apple. Apple's inventory turnover was more than that of BlackBerry's. BlackBerry was more efficient than Apple in producing its good.

Apple's return on revenue was higher than that of BlackBerry.

Blue Ace Autos Inc. and Ferdova Autos Inc. are two competing automobile companies. While Blue Ace Autos's Cost of goods sold / Revenue is 63.4%, the Cost of goods sold / Revenue of Ferdova Autos is 54.2%. What do you infer from this financial data? Blue Ace Autos is able to command a greater price premium for its products than Ferdova Autos. Blue Ace Autos has a higher profit margin than Ferdova Autos. Blue Ace Autos and Ferdova Autos have achieved a competitive parity. Blue Ace Autos is less efficient than Ferdova Autos in producing goods.

Blue Ace Autos is less efficient than Ferdova Autos in producing goods.

_____ is best described as the difference between the value a consumer attaches to a good or service and what he or she paid for it. Consumer equity Consumer price index Consumer surplus Consumer lifetime value

Consumer surplus

ChatRoom is an instant messaging mobile application. Initially, users were not charged. However, after a period of six months, the users had to pay for a fee to use the upgraded version of the application with advanced features. Which of the following business models does this best illustrate? Freemium Subscription-based Pay-as-you-go Razor-razor-blade

Freemium

The inventory turnover of G&L Apparels Inc. is 102.6 and that of White Couture Inc. a competitor, is 15.6. What do you infer from this financial data? G&L Apparels incurs a higher production cost than White Couture. G&L Apparels has lesser capital tied up in its inventory than White Couture. G&L Apparel faces a lower customer demand for its inventory than White Couture. G&L Apparel has more unsold merchandise than White Couture.

G&L Apparels has lesser capital tied up in its inventory than White Couture.

Which of the following is NOT a disadvantage of the balanced scorecard approach? It provides only limited guidance about which metrics to choose to measure competitive advantage. It is a tool merely for strategy implementation, not for strategy formulation. It fails to provide much insight into how metrics that deviate from the set goals can be put back on track. It fails to allow managers to prepare the company for future growth.

It fails to allow managers to prepare the company for future growth.

Which of the following is a disadvantage of the balanced scorecard approach to measure firm performance? It fails to allow managers and executives to find a balance between financial and strategic goals. It fails to allow managers to align their different perspectives to create a more focused corporation overall. It only relies on an internal view of the firm, ignoring the external view. It provides only limited guidance about which performance metrics to choose.

It provides only limited guidance about which performance metrics to choose.

Which of the following financial ratios typically indicates a company's efficiency in extending credit, as well as collecting debts? Fixed asset turnover Inventory turnover Return on revenue Receivables turnover

Receivables turnover

Though the microwaves manufactured by Sun Electra Inc. and FS Electronics Inc. sell at the same price of $600 per unit, the economic value created by Sun Electra Inc. is more than that of FS Electronics Inc. In the context of this scenario, which of the following statements is true? FS Electronics has been able to create more producer surplus for itself than Sun Electra. Sun Electra has been able to gain an advantage over FS Electronics through superior product differentiation. Sun Electra and FS Electronics have achieved a competitive parity. Sun Electra has a relative cost advantage over FS Electronics.

Sun Electra has a relative cost advantage over FS Electronics.

The payables turnover of Tesva Automobiles Inc. is 8.2 and that of its competitor, Mova Automobiles Inc., is 18.4. What does this financial data indicate? Mova Automobiles will have a stronger negotiating power with its suppliers than Tesva Automobiles. Tesva Automobiles will be more efficient than Mova Automobiles in generating interest-free loans from suppliers. Tesva Automobiles will take longer to pay its creditors than the time taken by Mova Automobiles. Mova Automobiles will have to pay its shareholders more dividends than that paid by Tesva Automobiles.

Tesva Automobiles will be more efficient than Mova Automobiles in generating interest-free loans from suppliers.

The tenet behind the triple bottom line is that: a firm should solely focus on increasing the economic value created for its customers. a firm's return on revenue can be broken down into three ratios; COGS / Revenue, R&D / Revenue, and SG&A / Revenue. a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy. a firm's primary objective should be increasing the total returns to its shareholders.

a firm should achieve positive results along the economic, social, and ecological dimensions to gain a sustainable strategy.

Paul estimated that a pair of Blue Cult jeans would be worth $50 for its brand and durability. However, at the Blue Cult store, the pair of jeans he wanted was available for $40. The difference of $10 in this scenario is referred to as the _____. break-even price reservation price producer surplus consumer surplus

consumer surplus

The sum of consumer surplus and producer surplus for a good or service equals the: economic value created. firm's profit. total return to shareholders. reservation price.

economic value created.

The idea that all available information about a firm's past, current state, and expected future performance is embedded in the market price of the firm's stock is called the _____. price-demand function efficient-market hypothesis time compression economies upper-echelons theory

efficient-market hypothesis

For an apparel manufacturing unit, the cost incurred on fabrics, buttons, and zippers is considered as variable cost primarily because it: is not included when calculating total costs. has no impact on a firm's profits. has an inverse relationship with the level of output. is dependent on the level of consumer demand.

is dependent on the level of consumer demand.

If a company has 25 million shares outstanding, and each share is traded at $400, the _____ is $10 billion. customer lifetime value return on revenue market capitalization total return to shareholders

market capitalization

Higher ratios of receivables turnover indicate: inefficiency in paying creditors. shorter durations of interest-free loans to customers. inefficiency in turning raw materials into finished goods. higher interest rates paid on credit extended by suppliers.

shorter durations of interest-free loans to customers.