Strategic management: Q9 Assessing firm performance

Revenue/Fixed assets

Which of the following best expresses fixed asset turnover?

Shareholders

_____ are the legal owners of public companies.

consumer surplus plus firm profit

Economic value creation is best expressed as _____.

largest economic value created.

Competitive advantage goes to the firm that achieves the:

return on risk capital

From an investors' or shareholders' perspective, the measure of competitive advantage that matters most is the _____.

$200

Gina paid $900 for a camera that she thought was worth $1100 for all the features included in it. For the consumer electronics firm selling the camera, however, the cost of producing the camera was only $350. What is the consumer surplus in this scenario?

capturing as much of the economic value created as possible.

In an economic context, strategy for producers is primarily about:

stock price appreciation plus dividends received over a specific period.

Return on risk capital primarily includes:

opportunity cost

Samantha is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Samantha's _____.

The firm's number of outstanding shares is 25 million.

The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data?

GD Products collects accounts receivables faster than AP Goods does.

The receivables turnover of GD Products Inc. is 13.6 and that of its competitor, AP Goods Inc., is 6.0. What does this financial data primarily imply?

3, that is, $600,000/$200,000

The working capital of a small home-based business is $200,000. The revenues generated account to $600,000, and the profits earned are $300,000. What would be the company's working capital turnover?

Customer experience

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

Net profits/Revenue

Which of the following equations best expresses return on revenue?

It is the product of the number of outstanding shares and the share price.

Which of the following expressions accurately describes market capitalization (market cap)?

The difference between the price charged and the firm's cost

Which of the following is NOT an accurate expression of the economic value created per unit of a product sold?

Total return to shareholders

Which of the following is an external performance metric?

Economic value created

_____ is best described as the difference between a buyer's willingness to pay for a product or service and a firm's total cost to produce it.

Total return to shareholders

_____, which is the return on risk capital, includes stock price appreciation plus dividends received over a specific period.

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

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2000 annually. In this case, the market capitalization is _____.

strong focus on innovation to improve current products and services.

A high percentage of R&D/Revenue ratio indicates a(n):

$170

A watch-making company has priced one of its wrist watches at $210. Most of its competitors sell similar watches at $180. Selling anything less than $150 would result in a loss for the company. However, the absolute maximum a customer is willing to pay for it is $170. In this scenario, what is the reservation price of the wrist watch?

producer surplus

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

In the economic value perspective, analysts not only consider historical costs, but also opportunity costs.

Which of the following is an advantage of applying the economic value creation perspective to assess a firm's performance?