big hoot **** son

Your furniture business sells couches. You price those couches to account for the cost you paid for the couches plus a standard markup you have established. You are using a ________ strategy. value-based pricing competitive pricing market penetration cost-based pricing

cost-based pricing

If you borrowed $150,000 to invest in a new business storefront at an 8% interest rate and pay approximately 35% in federal/state taxes, what is your post-tax cost of the debt?

$7,800

You have purchased inventory from a supplier on credit. Their terms are 2% 10 net 30. If you wanted to delay your accounts payable payments, which terms below would be the best to negotiate with your supplier?

2% 10 net 45

Broadly defined, how many types of customers are there?

4

ABC generated $10 million net cash from operating activities and used $11 million net cash for investing activities last year. ABC also used $4 million for financing activities. Which of the following is true about ABC's cash flow last year? ABC had a negative free cash flow ABC generated negative cash from its operating activities ABC generated $1 million dollars in free cash flow ABC had an overall net increase in cash of $5 million

ABC had a negative free cash flow

Your company has purchased a brand new production facility. Which of the following financial statements would disclose the source of the financing for your company's new facility? P & L statement Income statement Cash flow statement Balance sheet

Balance sheet

Which of the following statements about business valuation is not true? A company's adjusted net income considers owner's salary and cash benefits. Multiples reflect market behavior including demand and perceived risk. Deal structure is a vital component of the valuation process. Commonly available businesses are priced with a higher multiple.

Commonly available businesses are priced with a higher multiple.

Which of these forecasting techniques has the advantages of being easy to calculate and reacts quickly to changes in demand caused by trends or seasonality? Weighted Moving Average Moving Average Forecast Expected Value Analysis Exponential Smoothing

Exponential Smoothing

Which of the following statements about factoring is true? Factoring is a loan. Factoring is for only large corporations. Factors are most concerned about creditworthiness of the business owner. Factoring is common in industries with low receivables turnover.

Factoring is common in industries with low receivables turnover.

After stock has been issued it cannot be repurchased.

False

There is no limitation to the amount of funds that can be borrowed.

False

Which of the firms below will have the highest ROE? None of the above - leverage does not affect ROE Firm A with leverage of 2.9 Firm B with leverage of 2.5 Firm C with leverage of 2.0

Firm A with leverage of 2.9

Which of the following statements about Dupont Framework is false? f a firm's sales are greater than its assets, its efficiency indicator will be > 1 If a firm's equity is greater than its assets, its leverage indicator will be < 1 If a firm's net income has increased relative to sales, then the profitability component of Dupont will decrease If a firm's assets are increasing and its sales are decreasing over time, then its efficiency component of Dupont is also decreasing

If a firm's net income has increased relative to sales, then the profitability component of Dupont will decrease

If your business is currently experiencing cash flow issues, which of the following actions would you avoid? Delaying current accounts payable Reducing operating expenses Increasing inventory Reducing collection times for receivables

Increasing inventory

Cash flow statements are divided into the following three sections: Assets, liabilities, and equity Investing, operating, and financing activities Inflows, outflows, and accruals Revenues, expenses, and net income

Investing, operating, and financing activities

Based on the information presented in the Module, which forecasting frequency typically produces the most accurate results? Weekly Annually Daily Quarterly

Quarterly

Which kind of forecast can be used in a stable industry and stable market that is not impacted by seasonality? Rollover forecast Moving average forecast Expected value analysis Weighted moving average forecast

Rollover forecast

Which company departments need to be involved in developing a sales forecast? Sales, Marketing, Finance, Operations Sales and Marketing Departments The Marketing Department The Sales Department

Sales, Marketing, Finance, Operations

Scoring is based on year over year improvement in all areas total sales contribution margin increase in stock price

year over year improvement in all areas

When considering the sales cycle's impact on cash flows in a manufacturing business offering credit, which of the following statements is false? Selling the product and collecting the cash for credit sales occur simultaneously. Cash is spent on the process of converting raw materials into finished goods. The purchase of raw materials represents a cash outflow. Cash inflows occur when receivables are collected.

Selling the product and collecting the cash for credit sales occur simultaneously.

Which of the following is the least effective effort in collecting overdue receivables? Contact the customer via phone or email. Send paper statements to customers. Meet with customer to discuss overdue accounts. Send overdue accounts to collections and cancel customer credit immediately.

Send overdue accounts to collections and cancel customer credit immediately.

Which of the following is true about the income statement and balance sheet? Both statements represent a period of time Both statements represent a snapshot in time The income statement represents a period of time and the balance sheet represents a snapshot in time The balance sheet represents a period of time and the income statement represents a snapshot in time

The income statement represents a period of time and the balance sheet represents a snapshot in time

Which of the following is not one of the functions of inventory? To combine or couple parts of the production process To hedge against inflation To decouple the firm from fluctuations in demand To take advantage of quantity discounts

To combine or couple parts of the production process

Why should you fund projects internally with cash from profits, as opposed to debt or equity financing, when possible?

You can avoid costs of debt such as interest and risk of default. You can retain all of your assets. You can maintain decision-making and ownership of your company.

You are considering taking on an equity partner in your company. Which of the following scenarios is most likely an advantage of an equity partnership? Your partner wants a majority ownership and controlling interest in the company. Your equity partner's expectations for ROI may fluctuate. Your partner is a family member that you sometimes do not get along with. Your equity partner has core competencies complimentary to your skill set.

Your equity partner has core competencies complimentary to your skill set.

If you offer credit to your customers, which of the following is least likely to occur as a result of you offering that credit? Some of your customers may not pay. You may experience cash flow issues if customers pay late. You could incur costs related to managing the receivables. Your sales will likely decrease.

Your sales will likely decrease.

Which of the following must be considered when using the discounted cash flow method to value a business? risk of cash flows amount, timing, and risk of cash flows amount of cash flows timing of cash flows

amount, timing, and risk of cash flows

If you are concerned about your company's ability to generate sales through its efficient use of assets, you should calculate the _____ ratio. asset turnover return on assets receivables turnover return on investment

asset turnover

The leverage component of the Dupont Framework can be calculated by dividing a firm's _____ by its ______. assets; equity debt; equity net income; sales assets; liability

assets; equity

One of the key performance indicators that can be managed is contribution margin sales stock price ending inventory

contribution margin

If you are valuing a piece of equipment by considering its replacement cost today less any depreciation or wear and tear, you are utilizing the asset valuation technique referred to as ________. discounted cash flow approach market approach cost approach income approach

cost approach

Based upon your analysis of a competing service provider's fees and a survey about potential customers' perception of pricing, you decide to offer a good-better-best three-tiered pricing structure in addition to offering repeat customers 10% off their second purchase and 15% off their third purchase. You have adopted all of the following pricing strategies except: psychological pricing discount pricing cost-based pricing competitive pricing

cost-based pricing

Your company is strapped for cash and is having difficulties making payroll. Which of the following actions would not alleviate your cash flow issues? extending accounts payable selling or leasing assets delaying accounts receivable prioritizing or eliminating expenses

delaying accounts receivable

What type of insurance covers costs or damages as a result of any directors or officers in your organization being involved in a lawsuit? directors and officers insurance workers' compensation disability insurance business interruption insurance

directors and officers insurance

Which of the techniques listed below can be used to evaluate an investment compounded cash flow internal rate of success discounted cash flow net future value

discounted cash flow

If you are concerned about how efficiently your company is generating sales with the assets it has, which Dupont Framework indicator would you be most interested in? efficiency profitability solvency leverage

efficiency

Multiplying a company's price-to-book ratio by a company's book value per share is an application of _______ to value a business. sales multiples earnings multiples income multiples equity multiples

equity multiples

Recently, you recognized the need for help and hired two new employees to count and sort inventory in your warehouse facility. This is an example of _____ costs. service level human capital facility management

human capital

Which of the following is one of the potential drawbacks of the top-down budgeting approach? lack of strategic vision and long-term goals time intensive expensive lack of insight from front-line managers and segment needs

lack of insight from front-line managers and segment needs

Since many small- to medium-sized businesses are not actively publicly traded, it is challenging to utilize the ________ to value those businesses and their shares. market approach discounted cash flow approach cost approach income approach

market approach

To accomplish your goal of gaining substantial market share in a new market with your unique product, you decide to set your prices as low as possible with hopes that you can raise them once you have a substantial customer-base. This strategy is referred to as ___________. value-based pricing competitive pricing cost-based pricing market penetration

market penetration

Forecasts are created in marketing research & development operations production

marketing

The four areas in which decisions are made are: finance, operations, marketing, production marketing, research & development, production, forecasting marketing, research & development, production, finance Operations, production, finance, marketing

marketing, research & development, production, finance

General liability insurance covers damages to a person or to property caused by normal business operations a third party natural disasters a general decline in the economic conditions

normal business operations

Which of the following profitability indicators considers deductions for cost of goods sold, selling, general, and administrative expenses but does not include deductions for taxes and interest? operating profit gross profit net profit revenue

operating profit

You have noticed increasing shipping and handling fees with one of your suppliers. Your number of orders with this supplier per year has also increased. The shipping fees would be considered as _____________. order costs set-up costs holding costs carrying costs

order costs

Common size financial statements and ratio analysis can show: positive or negative trends within the company over time performance compared to industry standards how a company is performing with respect to a specific competitor performance over time, relative to competitors, and with respect to the industry

performance over time, relative to competitors, and with respect to the industry

If you are analyzing the discounts you are offering customers and evaluating how those discounts are impacting your ability to collect the sales price for your products, you are focusing on your business' ___________ capability of value-based pricing. price management pricing psychology superior customer insights pricing economics

price management

If you are evaluating the effect that a change in price will have upon customer demand for your product, which of the following value-based pricing capabilities are you considering? price management superior customer insights pricing psychology pricing economics

pricing economics

One of the most important aspects to manage is the number of shares outstanding projected ending cash position the amount of long-term debt the amount of short-term debt

projected ending cash position

You have received a shipment of product components but they have not yet been processed in your facility. These goods would be an example of ____________. finished goods work-in-process maintenance/repair/operating (MRO) raw material

raw material

All of the following are disadvantages of having too much inventory except: reduced availability of cash increased risk of product obsolescence difficulty in storage and control reduced holding costs

reduced holding costs

The establishment of quality and reliability factors is done in marketing finance production research & development

research & development

In a manufacturing firm, the master budget begins with a forecast of ______. production sales overhead labor and materials

sales

To fund the company's plans the financing area allows issuing stock only short-term debt short-term debt, long-term debt, and stock issuance only long-term debt

short-term debt, long-term debt, and stock issuance

The Dupont Framework is composed of the following performance indicators except: efficiency profitability leverage solvency

solvency

Opportunity cost is ________ a component of variable costs the benefits an individual, investor or business misses out on when choosing one alternative over another all answers are correct the cost an individual, investor or business is charged for doing business

the benefits an individual, investor or business misses out on when choosing one alternative over another

The Proforma shows projected results but it is only as good as the forecast market awareness research & development production capacity

the forecast

The internal rate of return method shows the profitability of investments and takes into account the time value of money the increase in future average income the profitability of investments without taking into account the time value of money the time value of money

the profitability of investments and takes into account the time value of money

Debt financing means _____ while equity financing involves _______. you are borrowing money that must be repaid with interest; you selling shares of your business in exchange for money you are borrowing money non-traditionally; you borrowing money traditionally you lose shares of your company; you gaining back shares of your company you must give up part of your ownership in the company; you giving your controlling interest in the company

you are borrowing money that must be repaid with interest; you selling shares of your business in exchange for money