Reference no: EM132262111
1. ROIC (return on invested capital) is a measure of:
a. firm profitability
b. firm debt
c. firm leverage
d. firm growth
2. Industry analysis does not include the following:
a. determining industry mission statement
b. determining industry definition
c. determining industry barriers to entry
d. determining industry rivalry
3. A certain marble quarry provides a unique type of marble that is richly colored and strikingly veined. It has been used for churches and public buildings throughout the world. The architect of a new headquarters for a prestigious Fortune 500 firm has specified the use of this marble, and this marble only, for this project. Which of the following statements is most likely to be true?
a. The cost of the marble will be expensive because of the bargaining power of the supplier.
b. The cost of the marble will be moderate because of the bargaining power of the buyer.
c. The cost of the marble will be moderate because of economies of scale.
d. The cost of the marble will be expensive because of the high strategic stakes involved.
4. As a barrier to new entry, absolute cost advantages can be based on
A) continuous advertising of brand and company names.
B) high product quality, service-oriented innovations, and good after-sales service.
C) cost reductions that arise from the mass production of standardized output.
D) the unique ability of established companies to spread fixed costs over a large volume.
E) control over low-cost inputs required for production, be they labor, materials, equipment, or management skills.
5. The extent of rivalry among established companies is lowest when
A) the industry's product is a commodity.
B) demand is growing rapidly.
C) exit barriers are substantial.
D) the industry is entering a decline stage.
E) the industry is dominated by a small number of large companies.
6. Felton Farm Supplies, Inc., has a Return on Assets = .08, Assets of $300,000 and a net profit margin of .05. What are its sales?
a. $3,750,000
b. $480,000
c. $300,000
d. $1,500,000
7. Benchmarking can be applied to ratio analysis. How is this different from comparing a firm's ratios to industry averages over time?
a. In benchmarking you compare your firm's performance to a previous "benchmarked" period and not industry averages.
b. It creates a benchmark of numerous industries for comparison purposes rather than a single industry due to wild fluctuations within specific industries.
c. It creates a benchmark that compares your firm to the best world-class competitors rather than an entire industry.
d. It creates a benchmark by taking an average of a portfolio of industries over a specific time period, usually 5 years, rather than a single industry in a single year due to wild fluctuations within specific industries over short periods of time.
8. Your Porter analysis has resulted in an evaluation of the industry environment in which supplier power, relative to the core industry, has become stronger. What conclusion can you draw from this?
a. the company will have a competitive advantage over its competitors.
b. the company will have a competitive disadvantage over its competitors
c. the cost of goods sold for industry participants is likely to fall
d. the cost of goods sold for industry participants is likely to rise
e. the revenue for industry participants is likely to rise.
9. The EPA has unveiled a proposal to limit greenhouse gases from new coal-fired power plants. What impact does this have?
a. Prices for electricity in homes will go up.
b. Electrical power plants will shift to natural gas for new construction.
c. Fracked natural gas will become a strong substitute for coal.
d. Consumers of electricity will be motivated to reduce consumption.
e. All of the above.
10. You have the following data:
Company ROA
Company A 22%
Company B 14%
Which company has the competitive advantage?
A. Company A
Company B