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| 1 | |
Which of the following statements is correct? |
| | A) | The appropriate financial measure is not profits but rather return on investment. |
| | B) | A commonly used measure of the return on investment is return on asset. |
| | C) | A firm uses the net profit margin to evaluate the firm's financial performance. |
| | D) | The net profit margin reflects the profits generated from each dollar of sales. |
| | E) | All of the above. |
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| 2 | |
Which of the following statements does NOT describe the strategic profit model? |
| | A) | It indicates the impacts of factors affecting a firm's ROA. |
| | B) | It is a method for summarizing the factors that affect a firm's financial performance. |
| | C) | It illustrates the different approaches for achieving a high ROA. |
| | D) | It suggests profit management path and asset management path. |
| | E) | It decomposes ROA into net profit and operating expenses. |
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| 3 | |
John wanted to know what the net sales and the net profit after tax were during the year 2005 for his nephew's business, the Better Coffee Shoppe. John should look at the store's: |
| | A) | balance sheet |
| | B) | income statement |
| | C) | financial leverage statements |
| | D) | strategic profit model |
| | E) | profitability statement |
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| 4 | |
Which of the following would have the lowest gross margins? |
| | A) | Banana Republic |
| | B) | Sears |
| | C) | Best Buy |
| | D) | Costco |
| | E) | Macy's |
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| 5 | |
John's Luggage is a store for people who travel with only the best luggage and travel accessories. Last year its net sales totaled $120,500. The value of the items it sold was $72,300. Taxes for the year ran $7,680. The only expenses that the operation has are (1) licenses for $200, (2) salaries to the owner and one part-time assistant for $22,000, (3) administrative expenses of $200, and (4) utilities at $1,300. Calculate the net profit percentage for Country Homes. |
| | A) | 14 percent |
| | B) | 24.7 percent |
| | C) | 40 percent |
| | D) | 60.2 percent |
| | E) | cannot be determined from the information provided |
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| 6 | |
Which of the following is net profit? |
| | A) | It equals gross sales minus net sales. |
| | B) | It is always expressed in before-tax dollars. |
| | C) | It is a measure of the overall performance of the firm. |
| | D) | It is a measurement of the liquidity of the firm. |
| | E) | It is net sales minus the cost of goods sold. |
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| 7 | |
What can be converted into cash within one year? |
| | A) | current assets |
| | B) | notes receivable |
| | C) | accrued liabilities |
| | D) | fixed assets |
| | E) | retained earnings |
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| 8 | |
Which of the following is a fixed asset? |
| | A) | a hand calculator that is kept near the register |
| | B) | the actual building in which the store is located |
| | C) | merchandise in the store |
| | D) | accounts receivable |
| | E) | all of the above |
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| 9 | |
What is wrong with the following performance objective written for a shop specializing in furs: "To earn $4,000,000 in profit during calendar year 2007"? |
| | A) | The objective is not qualitative. |
| | B) | The objective is not measurable. |
| | C) | The objective lacks a specific time frame. |
| | D) | The objective does not state the resources needed to accomplish it. |
| | E) | The objective is stated appropriately. |
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| 10 | |
John has had his newspaper kiosks for over one year. Aside from utilizing ROA as a way to measure his overall productivity, what else can John review? |
| | A) | market diversification |
| | B) | location |
| | C) | advertising costs |
| | D) | growth in same store sales |
| | E) | each site's managers |
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