Quiz 2 Company’s Income Statement
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Which one of the following is NOT a way to improve the P/Q rating of a company's brand of multi-featured cameras
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Increasing the number of models in the company's line of multi-featured cameras.
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Assume a company's Income Statement for a given quarter is as follows: Sales Revenues (50,000), Production Costs (26,500), Delivery Costs (1,600), Marketing Costs (8,500), Administrative Expenses (2,000), Operating Profit (14,400), Net Interest (750), Income Before Taxes (13,650), Taxes (4,095), Net Income (9,555). Based on the above data, which of the following statements is false?
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Delivery costs are 2.8% of revenues and represent the company's smallest cost component.
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One of the benefits of pursuing a strategy of social responsibility and corporate citizenship is
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An enhanced image rating, provided company spending for socially responsible activities is meaningful and is sustained over a multi-year period.
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Which of the following is NOT an action company co-managers can take to boost a subpar ROE?
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Issue additional shares of stock and use the proceeds to pay down the debt outstanding on the company's line of credit.
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Which one of the following actions is usually a dependable and appealing way for managers to try to boost their company's EPS?
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Achieve a differentiation-based competitive advantage over rivals in both the entry-level and multi-featured camera segments that company managers are savvy enough to sustain; as the market demand for digital cameras grows worldwide and the company exploits its competitive advantage to win additional sales, the profit margins from a growing sales volume of entry-level and multi-featured digital cameras typically results in increase in EPS.
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The industry-low, industry-average, and industry-high benchmarks for camera costs and operating profits on pp. 5-6 of each issue of the GLO-BUS Statistical Review.
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Are worth careful scrutiny by the managers of all companies because when the benchmarking data signals that a company's costs/operating profits for one or more of the benchmarks are clearly out-of-line (or unappealing), managers are well advised to take corrective action in the next decision round.
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According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 50 new workstations at a cost of $75,000 each and also spends $10 million for an addition to its assembly plant to accommodate the new workstations, than its annual depreciation costs will rise by
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$550,000
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Assume a company's Income Statement for a given period has the following entries: Sales Revenues (50,000), Production Costs (26,500), Delivery Costs (1,600), Marketing Costs (8,500), Administrative Expenses (3,000), Operating Profit (13,400), Net Interest (750), Income Before Taxes (12,650), Taxes (3,795), Net Income (8,855). Based on the above income statement data, the company's operating profit margin and net profit margin are
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26.8% and 17.7%.
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Which of the following sets of actions are unlikely to help a company achieve a differentiation-based competitive advantage over some/many of its rivals that are marketing entry-level cameras?
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Actions to raise the base pay of PAT members by 10% or more each year, charging prices for entry-level cameras that are $5 or more above any other company in that industry in all four geographic regions, and spending more on new product R&D per entry-level camera that is the highest in the industry (as reported on p. 5 of each issue of the GLO-BUS Statistical Review.)
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Which one of the following actions does NOT result in higher levels of PAT labor productivity in assembling cameras?
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Avoiding contracting the assembly of cameras to outside suppliers/contractors.
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Which of the following actions does not help make a company's brand of multi-featured cameras more competitive and attractive to buyers vis-a-vis the brands of rival firms?
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Increasing total compensation of PAT members to boost their productivity in assembling multi-featured cameras.
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Which of the following is an action company co-managers should seriously consider in trying to improve the company's credit rating? You may wish to consult the discussion of the credit rating that appears on the Help screen for the Comparative Financial Performance page of the GSR in answering this question.
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Issue additional shares of stock and use the proceeds to pay down the loans on the company's line of credit.
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Given the following Financial Statement Data: Sales Revenues (50,000), Operating Profit (14,400), Net Income (9,555), Total Current Assets (70,000), Total Assets (159,000), Total Current Liabilities (26,000), L-T Debt (43,000), Total Equity (91,400), Depreciation (4,000), Dividend Payments (2,250). Based on the above figures, the company's capital structure (defined as the sum of total debt outstanding and total stockholder's equity) consists of what percentages of debt and equity? (The percentages of total capital invested that are debt-financed and equity-financed are among the factors used to determine a company's credit rating, as explained in the Help section for the Comparative Financial Performances presented on p.7 of the GLO-BUS Statistical Review.)
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32% debt and 685 equity or 32:68.
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In which one of the following situations/circumstances is it most reasonable for a company to consider shifting away from pursuit of a strategy to strongly differentiate its multi-featured cameras from the multi-featured camera brands of rival companies and sell them at a premium price?
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When the market for high-end multi-featured cameras is crowded with companies using more or less copycat differentiation strategies to try to outcompete one another, thus making it difficult for any of these companies to earn attractively high profits.
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According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a base wage of $18,000, a $60 quarterly bonus for perfect attendance, and annual fringe benefits of $2,500, if a PAT is paid a $1 incentive bonus per camera assembled, and if a PAT assembles 12,000 cameras per year (or 3000 cameras per quarter), than the annual compensation cost of a single PAT member and a fully-staffed PAT would be
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$23,740 and $94,960.
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If a company earns net income of $40 million in Year 8, has 10 million shares of stock, pays a dividend of $1,50 per share, and has annual interest costs of $15 million, then
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The company's EPS for Year 8 would be $4.00 and its retaining earnings for Year 8 would be $25 million (net income of $40 million less dividend payments of $15 million).
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Which one of the following is an attractive and effective way to reduce the production costs of multi-featured cameras and help put the company in better position to achieve a low-cost competitive advantage over rival companies based on lower production and marketing costs per multi-featured camera sold?
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Striving to keep the labor costs per camera assembled in-house to amounts that are well below the industry-average benchmark (as reported on p. 5 of each issue of the Glo-BUS Statistical Review).
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If a company is being outcompeted by various rival companies in the Europe-Africa market for mulit-featured cameras and consequently has an unappealing low sales volume and market share in Europe-Africa, then company managers should
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Explore correcting most or all of the company's competitive weaknesses (shown at the bottom of the latest Competitive Intelligence Report for the Europe-Africa region); in addition, managers should initiate actions that they believe will result in the company having at least two important competitive strengths vis-a-vis its Europe-Africa rivals in the upcoming decision round.
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The most important/essential results from the latest decision round that company managers need to review/study in order to guide their strategic moves and decisions to improve their company's competitiveness and rank among the top-performing companies in the upcoming decision round are
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The Quarterly Snapshot data in the top sections of the Competitive Intelligence Report that shows each company's competitive efforts (advertising, tech support, prices, P/Q ratings, promotions, models available, and so on) in each geographic region.
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A company's managers should give serious consideration to changing from a low-cost/low price strategy for multi-featured cameras to a different strategy in the multi-featured camera market when
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So many other rival companies are marketing low-priced multi-featured cameras that intensive competition in the low-end multi-featured camera segment makes it quite difficult for every company competing for buyers of low-priced multi-featured cameras to capture big enough revenues and global market share to earn attractively large profits selling low-priced multi-featured cameras.
