Chapter 5 Capstone

In order to determine market capitalization, one multiplies which of the following together?

share price and number of outstanding shares

A company's total return to shareholders consists of which of the following?

stock price appreciation, dividends received

Which of the following statements about the disadvantages of the accounting profitability perspective are correct?

- Accounting data are historical and therefore backward-looking. - Accounting data focus primarily on tangible assets.

Which of the following correctly describe the information used for comparing the performance of public companies based on accounting profitability?

- The information is derived from such data as income statements and balance sheets. - The relative performance is evaluated using standardized financial metrics. - The information is filed in a 10-K report.

When a firm goes bankrupt, shareholders

cannot recover their risk capital

To determine how efficiently a company can produce a good, managers look to the ______.

cogs/revenue

When one wants to further explore the difference in return on revenue (ROR) for two competitors, one can look at which of the following ratios? (Check the three that apply.)

cogs/revenue, sga, r&d

Public companies are required by law to release detailed accounting data, which enables

comparative analysis of firms

If Tom would have paid $1,000 for a new laptop but was able to purchase one for $800, the $200 he saved is considered his

consumer surplus

______ minus depreciation is called the book value.

cost of assets

Compared to the past, the importance of firms' intangibles has increased. Therefore the importance of a firm's book value has

decreased

True or false: Stock market valuations are often unreliable due to market fluctuations and are therefore not used to assess competitive advantage.

false

A company's stock price increases if the company

grows faster than expected

Which of the following would provide the best benchmark of a computer firm's performance relative to other high-tech firms?

nasdaq

Which of the following are considered off-balance sheet items?

operating leases, pension obligations

When a firm does favorably compared to similar firms, it is said to

outperfrom

if a firm has a good ______ strategy, its product will have a higher perceived value and the firm will have a competitive advantage over a competitor that creates a product at equal cost but with a lower reservation price.

product differentiation

Which of the following are among the most commonly used metrics for comparing the performance of different companies? (Check all that apply.)

return on revnue, equity, assets

From the view of a shareholder, the measure of competitive advantage that matters most is return on

risk capital

To determine how well money devoted to sales support is being spent, managers look at the marketing intensity ratio, which is also known as ______.

sga/revenue

Which of the following are standard performance dimensions for a company? (Check all that apply.)

1. a firm's accounting profitability 2. how much economic value a firm generates 3. how much economic value a firm generates

What is one potentially negative outcome that firms face when they deliver higher than expected growth?

Investors will expect a similarly high level of growth in the future.

The most a consumer is willing to pay for a product is equivalent to the product's

total perceived computer benefits

Investors in a company are mostly concerned about the company's

total return to shareholders

In general, a firm generates ______ when its cost of capital is lower than its ROIC.

value