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GLO-BUS QUIZ 2 Solutions (2019)

1) A company’s managers should probably give serious, consideration to changing from a low cost/low price strategy for entry-level cameras to a different strategy when a. The company’s market share of entry-level camera sales is below 30% in all four geographic regions, its credit rating is below an A, and its ROE is below 18%. b. Sizable unfavourable shifted in exchange rates can occur in one or more region, thereby causing the company’s EPS to fall far below Investor Expectations. c. The low – price end of the market for entry – level cameras is overcrowded with competitors, making it difficult to earn attractive profits in the low – price end of the entry – level cameras marketplace. d. the company’s operating profits per entry – level camera sold are not close to the higher in the industry in at least three geographic regions ( based on information reported on p. of the most recent GLO – BUS Statistical Review). e. a big fraction of the companies in the industry are marketing 4 or more model of entry – level cameras with a P/Q rating of 4 – stars or higher. 2) Which of the following combination of actions will likely provide the biggest competitive benefits in helping a company achieve a differentiation – based competitive advantage over some/many of its rivals that are selling multi – featured cameras? a. Charging prices for multi – featured cameras that are $5 or more above any other company in the industry in all four geographic regions and offering buyers a choice of 3 models of multi – featured cameras with a P/Q rating of 3.5 – stars or higher. b. Charging prices for multi – featured cameras that are $10 higher than any other company in the industry in all four geographic regions and striving to market multi – featured cameras with a targeted P/Q rating that is about 0.5 – stars above the prior – year’s industry average (as shown In the graph at the bottom of p. 4 of the most recent GLO – BUS Statistical Review). c. Offering buyer 5 models of multi – featured cameras with a P/Q rating of 4 – stars or higher and a warranty period of 2 years, spending above – average amounts on quarterly advertising in all four geographic regions, and having 2 quarterly promotions of 4 weeks each with a discount of 16% or higher in all 4 geographic regions d. Striving to have a total compensation pay package for full-time PAT members that is the highest in the industry, outspending all other companies in the industry in corporate social responsibility and citizenship, and charging process for multi-featured cameras that are $2-$3 below the most-expensively priced multi-featured camera in the prior year in all four geographic regions e. Spending heavily on quarterly PAT training and productivity improvement, outspending all other companies in the industry on corporate social responsibility and citizenship, and marketing multi-featured cameras with a 4-star or higher P/Q rating 3) Which one of the following is NOT a way to improve the P/Q rating of a company’s brand of multi-featured cameras? a. Increasing the number of models in company’s line of multi-featured cameras b. Improving the calibre of core component used in making the company’s multi-featured cameras c. Spending additional money to improve the brand-specific components used in making the company’s multi-featured cameras d. Adding more special utility features e. Increasing expenditures for new product R&D, engineering, and design 4) Actions that can lead to higher labour productivity in assembling cameras do NOT include a. increasing the quarterly bonus for perfect attendance b. reducing the number of entry-level and/or multi-featured camera models being assembled c. using higher calibre core components in both entry-level and multi-featured cameras (using better component speeds up camera assembly) d. increased quarterly expenditures for PAT training and productivity improvement e. increasing total annual compensation per full-time PAT member 5) Which of the following actions does not help make a company’s brand of entry-level cameras more competitive and attractive to buyers vis-à-vis the brands of rival firms? a. Increasing the P/Q rating of the company’s entry-level cameras from 3 stars to 4 stars in all four geographic regions b. Not outsourcing the assembly of entry-level cameras to contract suppliers (which risks damaging the company’s image rating) c. Increasing the number of entry-level camera models in the company’s product line from 3 models to 5 models d. Increasing advertising expenditures by $500,000 per quarter in the two geographic regions where the company’s market shares of entry-level camera sales are lowest e. Increasing the price discount offered during the company’s promotional campaigns for entry-level cameras and also increasing the length of the warranty period for entry-level cameras 6) The industry-low, industry-average, and industry-high cost benchmarks on pp. 5-6 of the latest issue of the GLO-BUS Statistical Review a. aid managers in assessing whether their company’s costs for the benchmarked items are adequately competitive-when such us not the case, the company’s managers should promptly address how best to correct the high-cost problem(s). b. are of little value to company managers in making decisions to improve company performance in the upcoming decision round, although they may be of interest to thise managers who are curious about competition in the prior year. c. are only valuable to the managers of companies whode costs are above the industry average for one or more of the benchmarked cost categories. d. Have the greatest value to the managers of companies that are considering increasing their company’s advertising expenditures and promotions in the upcoming decision round. e. Are of great value to the managers of companies whose costs are below the industry average for one or more of the benchmarked cost categories and are of minimal value to the managers of companies whose costs are above the industry averages. 7) Which one of the following is an attractive and effective way to reduce the production, marketing, and other costs of entry-level cameras and help achieve a low-cost competitive advantage over rival companies based on lower overall costs per entry-level camera sold? a. Keeping the annual base wage per PAT member below $17,500. b. Producing an entry-level camera with a P/Q rating of ½-star c. Spending less than $500,000 annually for Corporate Social Responsibility and Citizenship initiatives d. Trying several different “what-if” entries for core components to be used in entry-level cameras in order to discover the lowest cost combination for achieving the target P/Q rating e. Investing in robotic assembly equipment to reduce the number of PATs needed to assemble cameras and thus lower labour costs per camera assembled at the company’s Taiwan plant 8) The most important (or 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 a. The Quarterly Snapshot data at the top of the Competitive Intelligence Report for each geographic region that show each company’s competitive efforts (advertising, tech support, prices, P/Q rating, promotional activities, and so on). b. The company’s competitive strengths and weaknesses for each geographic region that appear at the bottom of each Quarterly Snapshot page of the Competitive Intelligence Report. c. The two graphs at the bottom of p. 4 of each issue of the GSR. d. The credit rating data and the financial and operating ratios for each company that appears on p. 7 of the GSR. e. The Forecasts of Retailer Sales of entry-level and multi-featured cameras that aooear on p. 4 of the GSR. 9) In which of the following situations/circumstances is it most reasonable for a company to consider shifting away from pursuit of a strategy to strongly differentiates its multi-featured cameras from the multi-featured camera brands of rival companies and sell them at a premium price? a. When most every other rival company company seems to be pursuing a low-cost/low-price/high-volume strategy in the global market for multi-featured cameras b. When a company’s strategy to differentiate its multi-featured cameras from rival brands is easily defeated by the actions of one or more rivals producing multi-featured cameras with the same (or higher) P/Q rating and the same (or higher) number of multi-featured camera models-these are the only two approaches to differentiation that lead to strong company performance c. When a company’s strategy to differentiate its top-quality, premium-priced, multi-featured cameras from rival brands is easily defeated by rival companies whose multi-featured cameras have a P/Q rating that is below 3-stars d. 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 e. When selling a large volume of multi-featured cameras is much more important to achieving a steadily rising stock price and credit rating than is producing and marketing top quality (4-stars or higher) multi-featured cameras that are heavily advertised and highly promoted 10) The benefits of pursuing a strategy of social responsibility and corporate citizenship include a. 15% increases in the sales of entry-level and multi-featured cameras at all types if retail outlets for digital cameras (because of widespread consumer approval of the company’s commitment to being a good corporate citizen). b. the 10% increase in the sales of entry-level and multi-featured cameras that occurs when a company wins one or more Gold Star Awards for Corporate Citizenship given by the World Council to Promote Exemplary Corporate Citizenship. c. the positive impact that such a strategy has on the company’s image rating, provided the company spends a meaningful amount on socially responsible activities and such spending is sustained over a multi-year period. d. the strong positive impact such a strategy has on boosting the company’s ROE and stock price, whenever the amount the company spends for socially responsible activities is 10% or more above the most recent year’s industry average. e. the 5% increase in the company’s global sales volume and global market share of entry-level and multi-featured cameras that occurs when the company’s spending for socially responsible activities is 10% or more above the most recent year’s industry average. 11) A dependable and attractive strategy for managers to use in trying to boost their company’s EPS is to a. provide retailers in each geographic region with at least $200,000 per quarter more tech support than any other rival company; the resulting retailer loyalty to stocking and selling your company’s camera brand will typically yield consistent annual increase in total profits and EPS. b. Market multi-featured cameras with a 4 ½ or 5-star P/Q rating in all four geographic regions while also striving to be the biggest seller of entry-level cameras in all 4 regions every year, the added revenues and profits on the extra sales of cameras worldwide will normally cause the company’s EPS to increase in most years. c. spend at least $1 million to $3 million more on advertising than any other company in all four regions, the resulting annual increases in sales volumes, revenues, and profits will normally boost the company’s EPS. d. borrow against the company’s line of credit as may be needed to finance most all of the company’s negative cash balance (to the extent that maintaining a B credit rating or higher will allow) and then use whatever positive cash balances are projected each quarter to repurchase shares of common stock on an ongoing basis. e. offer the maximum number of entry-level and multi-featured digitak camera models in each geographic region every year, the resulting increases in sales and market share will boost EPS. 12) If a company is being outcompeted by various rival companies in the Europe-Africa market for multi-featured cameras and consequently has an unappealingly low sales volume and market share in Europe-Africa, then company managers should a. Explore correcting most or all of the company’s 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-à-vis its Europe-Africa rivals in the upcoming decision round. b. Produce and assemble only 1 multi-featured camera model with a P/Q rating of 1-star; increase quarterly advertising in Europe Africa by 50%, and cut the company’s multi-featured camera price in Europe-Africa to $5-$10 below the lowest price charged by any rival company in Europe-Africa in the prior decision round. c. Produce and assemble 5 models of multi-featured cameras with a 3-star P/Q rating, charge a price for multi-featured cameras in Europe-Africa that is about $10 below the prior year’s industry average in Europe-Africa, and have 3 quarterly promotions of 2 weeks in length and discount of 16% or more in the Europe-Africa region. d. Increase spending for corporate social responsibility and citizenship to an amount that exceeds the prior-year maximum by at least 10%, hold 4 promotions for multi-featured cameras of 2 weeks each, offer a promotional discount of 20%, and increase quarterly advertising in Europe Africa by 25%. e. immediately increase quarterly advertising expenditures in Europe-Africa to 10%-15% more than the highest amount spent by a rival company in the prior year, set a price for multi-featured cameras that is no more than $10 above the lowest multi-featured camera price charged by a rival company in the prior year in the Europe-Africa region, and offer a warranty period for multi-featured cameras in Europe-Africa of at least 2 years. 13) If a company earns net income of $38 million in Year 8, has 10 million shares of stock, pays a dividend of $1.50 per share, and has annual interest cost of $10 million, then a. The company’s earnings per share would be $1.30 (net income of $38 million less dividend payments of $15 million less interest payment of $10 million = $13 million divided by 10 million shares). b. The company’s earnings per share would be $2.30 (net income of $38 million less divided payments of $15 million = $23 million divided by 10 million shares). c. the company’s EPS for Year 8 would be $3.80 and its retained earnings for Year 8 would be $23 million (net income of $38 million less dividend payment of $15 million). d. the company’s retained earning fir Year 8 would be $13 million (net income of $38 million less dividend payments of $15 million less $10 million in interest payments) e. the company’s retained earnings for the year would be $28 million (net income of $38 million less interest payment of $10 million) 14) Which of the following is NOT an action company co-managers can take to boost a subpar ROE? a. Decrease the dividend payment so as to boost the amount of earning retained in the business b. None of these c. Strive to boost the company’s net income d. Use available cash (or perhaps borrow against the company’s line of credit) to repurchase shares of stock e. Increase dividend payment so as to reduce the amount of net income retained in the business (retained earning act to increase equity investment and thus dampen ROE) 15) Which of the following is NOT 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. a. Strive to boost operating profits (higher operating profits boost the company’s times interest earned ratio) b. Strive to increase net income, which should help increase the company’s free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the company’s line of credit) c. Reduce dividends and use the cash saved from lower dividend payments to pay down the loans outstanding on the company’s line of credit d. Issue additional shares of stock and use the proceeds to pay down the loans on the company’s line of credit e. Repurchase shares of the company’s stock 16) Assume a company’s Income Statement for a given period has the following entries: Based on the above income statement data, the company’s operating profit margin and net profit margin are a. 28.8% and 16.3% b. 53.0% and 10.15% c. 26.8% and 19.1% d. 24.8% and 16.3% e. 28.8% and 17.7% 17) According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 80 news workstations at a cost $75,000 each and also spend $20 million for an addition to its assembly plant to accommodate the new workstation, then its annual depreciation costs will rise by a. 4% of $26 million or $1,040,000 b. $1,875,000 c. 4% of $20 million or $800,000 d. $2,400,000 e. 1.25% of $20 million or $250,000 18) Assume a company’s Income Statement for a given quarter is as follows: Based on the above date, which of the following statements is false? a. Delivery costs are 3.2% of revenues and are the company’s smallest operating cost b. Administrative expenses are 4.0% of revenues c. Net interest costs are 1.5% of revenues d. Production costs are 53% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 47% e. Marketing costs are 20.0% of revenues 19) 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), then the annual compensation cost of a single PAT member and a fully-staffed PAT would be a. $23,740 and $94,969 b. $24,740 and $ 74,220 c. $30,240 and $120,960 d. $18,000 and $54,000 e. $32,740 and $130,960 20) Given the following Financial Statement data: 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? a. 15% debt and 85% equity or 15:85 b. 20% debt and 71& equity or 29:71 c. 32% debt and 68% equity or 32:68 d. 25% debt and 75% equity or 25:75 e. 47% debt and 53% equity or 47:53 1. Based on the above figures, the company’s EPS and dividend yield (see the discussion on the Help screen for the Comparative Financial Performance page of the GSR for more details if you are unsure how to calculate these statistics) are $3.82 and 23.6%. $3.02 and 2.4%. $3.82 and 2.6%. $3.52 and 3.6%. Cannot be determined from the information provided. 2. Income Statement Data Quarter 1 (in 000s) 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? Net interest costs are 1.5% of revenues Production costs are 55% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 45% Administrative expenses are 4.0% of revenues Marketing costs are 17.0% of revenues Delivery costs are 3.2% of revenues and are the company’s smallest operating cost 3. If in a given year a company spends $2 million on new product development, design, and engineering for its entry-level camera line; $4 million on new product development, design, and engineering for its multi-featured camera line; assembles and ships 1,000,000 entry-level cameras and 200,000 multi-featured cameras, then the company’s production costs for new product development expenditures for entry-level cameras would be $20.00 per camera $4.00 per camera $2.00 per camera $5.00 per camera capitalized and depreciated over the next five years, thus producing an average cost per entry-level camera of $0.40 annually for each of the next five years 4. Given the following Financial Statement data: Income Statement Data Quarter 1 (in 000s) Sales Revenues $50,000 Operating Profit 14,400 Net Income $9,555 Balance Sheet Data Total Current Assets $70,000 Total Assets 163,000 Total Current Liabilities 40,000 L-T Debt (draw against credit line) 23,000 Total Equity 90,000 Other Financial Data Depreciation $4,000 Dividend payments $2,250 Based on the above figures, the company’s current ratio (defined as current assets divided by current liabilities, as per the Help screen for the Comparative Financial Performance page of the GSR) is $30,000 None of these 0.57 1.75 2.69 5. According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a $24,000 annual compensation package, utilizes no overtime, employs 200 PATs, spends $1,500 per quarter for training and productivity improvement for each PAT, incurs no severance expenses, and has annual PAT productivity of 12,000 cameras, then the company's in-house labor cost per camera assembled at regular time (no use of overtime) would be $8.67 None of these $8.00 $2.00 $8.50 6. If a company earns net income of $25 million in Year 8, has 10 million shares of stock, pays a dividend of $1.00 per share, and has annual interest costs of $10 million, then the company would have Year 8 earnings per share of $1.50. the company's retained earnings for the year would be $5 million (net income of $25 million less dividend payments of $10 million less interst costs of $10 million). the company’s retained earnings for the year would be $5 million; the $5 million in retained earnings would be shown on the company’s balance sheet as a reduction in equity investment by stockholders in Year 9. the company’s retained earnings for Year 8 would be $15 million (net income of $25 million less dividend payments of $10 million); the $15 million in retained earnings is treated on the company’s balance sheet as additional accumulated retained earnings and thus additional equity investment by stockholders in Year 8. the company’s dividend payout for the year would equal 60% of earnings.. 7. Which of the following is not an action company co-managers can take to boost a subpar ROE? Increase dividend payments so as to reduce the amount of net income retained in the business (retained earnings act to increase equity investment and thus dampen ROE) Decrease the dividend payment so as to boost the amount of earnings retained in the business Use available cash (or perhaps borrow against the company’s line of credit) to repurchase shares of stock Strive to boost the company’s net income None of these 8. Assume a company’s Income Statement for a given period has the following entries: Income Statement Data Quarter 1 (in 000s) 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 2,400 Income Before Taxes 12,000 Taxes 3,600 Net Income $8,400 Given the above figures, the company’s net profit margin (defined as net income divided by sales revenues, as per the Help screen for the Comparative Financial Performance page of the GSR) is 19.1% 17.9% 18.8% 22.3% 16.8% 9. According to the cost allocation methods used in the company’s accounting system and described in the Help section for the Operations Report for any of the four geographic regions, if a company spends $6 million to advertise its camera lines in North America, assembles and ships 300,000 entry-level cameras and 150,000 multi-featured cameras to its North American dealers, derives revenues of $45 million from its sales of entry-level cameras and $55 million from the sales of its multi-featured cameras, then 45% of the $6 million in advertising expenditures will be allocated to the costs of advertising for entry-level cameras and 55% will be allocated to the costs of multi-featured cameras. advertising costs for entry-level and multi-featured cameras will be 4% of camera revenues in North America. the per camera advertising costs for entry-level cameras will be twice as large as the per camera advertising costs for multi-featured cameras. the per camera advertising costs for entry-level cameras will be $13.33 and the per camera advertising costs for multi-featured cameras will also be $13.33. 50% of the $6 million in advertising expenditures will be allocated to the costs of advertising for entry-level cameras and 50% will be allocated to the costs of multi-featured cameras. 10. Given the following Financial Statement data: Income Statement Data Full Year (in 000s) Sales Revenues $200,000 Operating Profit 42,600 Net Income $27,300 Balance Sheet Data Total Current Assets $70,000 Total Current Liabilities 26,000 Total Assets 179,000 L-T Debt (draw against credit line) 63,000 Total Equity 90,000 Other Financial Data Depreciation $4,000 Dividend payments $10,000 Based on the above figures, the company’s debt payback period (the number of years required to pay off loans outstanding; see the discussion on the Help screen for the Comparative Financial Performance page of the GSR for more details of how to calculate the debt payback period) is 2.96 years None of these 5.29 years 2.01 years 2.31 years 11. 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 $250,000 each and also spends $5 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by $700,000 $17,500,000 $1,750,000 $350,000 None of these 12. Which of the following is not 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. Strive to increase net income, which should help increase the company’s free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the company’s line of credit) Issue additional shares of stock and use the proceeds to pay down the loans on the company’s line of credit Repurchase shares of the company’s stock Reduce dividends and use the cash saved from lower dividend payments to pay down the loans outstanding on the company’s line of credit Strive to boost operating profits (higher operating profits boost the company’s times interest earned ratio) 13. Which of the following is not 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. Strive to increase net income, which should help increase the company’s free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the company’s line of credit) Issue additional shares of stock and use the proceeds to pay down the loans on the company’s line of credit Repurchase shares of the company’s stock Reduce dividends and use the cash saved from lower dividend payments to pay down the loans outstanding on the company’s line of credit Strive to boost operating profits (higher operating profits boost the company’s times interest earned ratio) 14. Assume a company’s Income Statement for a given period has the following entries: Income Statement Data Quarter 1 (in 000s) Sales Revenues $50,000 Production Costs 26,500 Delivery Costs 1,600 Marketing Costs 7,500 Administrative Expenses 2,000 Operating Profit 15,400 Net Interest 750 Income Before Taxes 14,650 Taxes 4,395 Net Income $10,255 Based on the above income statement data, the company’s operating profit margin (defined as operating profit divided by sales revenues, as per the Help screen for the Comparative Financial Performance page of the GSR) is 28.8% 26.8% 30.8% 29.3% 22.0% 15. According to the cost allocation methods used in the company's accounting system that are described in the Production Cost Report, if a company employs 100 PATs at a total labor cost of $12,000,000 (including wages, fringes, incentives, overtime, training, and severance expenses), assembles and ships 800,000 entry-level cameras and 200,000 multi-featured cameras over the course of a year, has revenues of $100 million from sales of entry level cameras, and revenues of $100 million from the sale of multi-featured cameras, then the total annual labor costs allocated to the assembly and shipment of entry-level cameras and the labor costs per entry-level camera assembled and shipped, respectively, will be $9,600,000 and $12.00. $8,000,000 and $8.00. $6,000,000 and $7.50. None of these. $8,000,000 and $15.00. 16. Given the following Financial Statement data: Income Statement Data Full Year (in 000s) Sales Revenues $200,000 Operating Profit 57,600 Net Income $38,220 Balance Sheet Data Total Current Assets $70,000 Total Current Liabilities 26,000 Total Assets 139,000 L-T Debt (draw against credit line) 23,000 Total Equity 90,000 Other Financial Data Depreciation $16,000 Dividend payments $9,000 Based on the above figures, the company’s return on equity (defined as net income divided by total equity investment of stockholders, as per the Help screen for the Comparative Financial Performance page of the GSR) is 19.1% 42.5% 28.8% 27.5% 26.8% 17. As can be seen from the numbers in the Production Cost Report, the biggest percentage of your company's total production costs for entry-level cameras is for new product development labor costs warranty costs depreciation special utility features, core components, and brand specific components 18. According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a base wage of $18,500, a $50 quarterly bonus for perfect attendance, and annual fringe benefits of $3,300, if a PAT is paid a $1 incentive bonus per camera assembled, and if a PAT assembles 9,600 cameras per year (or 2,400 cameras per quarter), then the annual compensation cost of a single PAT member and a fully-staffed PAT would be None of these $25,300, and $101,200 $31,200 and $124,800 $24,400 and $97,600 $22,000 and $88,000 19. Given the following Financial Statement data: Income Statement Data Full Year (in 000s) Sales Revenues $200,000 Operating Profit 57,600 Net Income $38,220 Balance Sheet Data Total Current Assets $70,000 Total Assets 139,000 Total Current Liabilities 26,000 L-T Debt (draw against credit line) 23,000 Total Equity 90,000 Other Financial Data Depreciation $16,000 Dividend payments $9,000 Annual dividend per share $0.90 Number of shares outstanding 10,000 Current stock price $34.00 Based on the above figures, the company’s EPS and dividend yield (see the discussion on the Help screen for the Comparative Financial Performance page of the GSR for more details if you are unsure how to calculate these statistics) are $3.02 and 2.4%. $3.52 and 3.6%. Cannot be determined from the information provided $3.82 and 23.6%. $3.82 and 2.6%. 20. Given the following Financial Statement data: Income Statement Data Full Year (in 000s) Sales Revenues $200,000 Operating Profit 38,000 Net Interest 6,000 Net Income $22,400 Balance Sheet Data Total Current Assets $70,000 Total Assets 139,000 Total Current Liabilities 26,000 L-T Debt (draw against credit line) 23,000 Total Equity 90,000 Other Financial Data Depreciation $16,000 Dividend payments $9,000 Based on the above figures, the company’s times interest earned ratio (one of the components used in determining the company’s credit rating and defined as operating profit divided by net interest, as per the discussion on the Help screen for the Comparative Financial Performance page of the GSR) is 8.64 Cannot be determined from the information provided 7.20 6.33 3.73 GLO-BUS QUIZ 2 Professor Duffy The factors that affect a company's P/Q rating for UAV drones includethe assembly quality incentives paid to drone PAT members, the company's prior-year brand reputation, and the prior year worldwide average warranty claim rate on the company's drones.Which of the following ARE components of the compensation package for members of production assembly teams?The dollar-cost of a PAT member's fringe benefit package, assembly quality incentives ($ per unit assembled divided equally among PAT members), year-end bonus for perfect attendance, and annual base wageThe factors that affect the productivity of both camera PATs and drone PATs includethe size of assembly quality incentives paid to camera/drone PATs, how favorably the overall size of the company's total compensation package (not including overtime pay) per camera/drone PAT member compares against the camera/drone all-company averages, and changes in the number of camera/drone models that have to be assembled.The company's present assembly plant has sufficient space forup to 150 workstations, without expanding the size of the plant.A camera-maker's price competitiveness in a particular geographic region is determined bywhether its price is above or below the average price of all companies competing in that geographic region.The interest rate a company pays on loans outstanding depends onits credit rating.Which the following are not factors in determining a company's credit rating?The size of the company's year-end cash balance, the average of its ROE for the past three years, and how many times the company has been put on credit watch.Consumer purchases of digital cameras are seasonal withabout 20% of consumer demand coming in quarter 1, 20% in quarter 2, 20% in quarter 3 and 40% in quarter 4.Which of the following are the four geographic regions in which the company is selling its cameras?Europe-Africa, Latin America, Asia-Pacific, and North America.Which of the following currencies are involved in affecting the revenues your company receives on camera shipments to retailers in the four geographic regions of the world where it markets cameras?U.S. dollars, Taiwan dollars, Singapore dollars, euros, and Brazilian real.Which of the following do not have a bearing in determining a company's unit sales and market share of entry-level or multi-featured cameras in a particular geographic region?The size of the incentive bonus paid to PATs, the percentage of cameras that were outsourced, and warranty claims costs.The company's shipments of digital cameras to retailers in various foreign countries are subject toimport duties imposed by the countries to which the cameras are shipped and the effects of fluctuating exchange rates.The factors that affect a company's P/Q rating include:the caliber of core components; company's cumulative spending for new product R&D, engineering and design; the number of models; camera body ergonomics/durability; and the number of special utility features.The company maintains a production facility inTaiwan.The decisions that company co-manages make each year are organized aroundmarketing, product design, assembly/shipping, compensation and labor force, and finance.The options that a company has for assembling enough cameras to meet peak-quarter order form retailers includehiring "temporary" PATs, the use of overtime, and outsourcing assembly to contact assemblers.The factors that affect the productivity of PATs includethe size of incentive bonuses to workers, base pay increases, perfect attendance bonuses, the size of the fringe benefits package, how favorably the overall size of a company's compensation package compares with the industry-average compensation package, expenditures for PAT training and productivity improvement, and changes in the number of models.The market for digital cameras is projected to growat 8-10% annually during the year 6-year 10 period and at 4-6% during the year 11-year 15 period.Which of the following is not an accurate description of the market for digital cameras?Retailers get their cameras from camera-makers on a just-in-time delivery basis.Which of the following are not measures on which a company's performance is judged/scored?P/Q rating, dividend payments, revenues, market share, and total number of cameras sold, and balance sheet strength.Which of the following most accurately describes your company's production/assembly operations?Most all camera components are sources from outside suppliers having plants or distribution centers near the company's assembly facility; the company uses workstations staffed by 4-person teams to assemble cameras. In the most recent year, the current productivity of the assembly teams was 2,500 cameras per quarter or 10,000 per year. Some cameras are outsourced from contract assemblers that are paid a $25 fee for each camera assembled.Which of the following statements accurately describes the distribution of the company's unit sales across the four geographic regions in which it sells cameras?The company sells 40% of its cameras its biggest region and sells only 10% of its cameras in its smallest region.Which one of the following is NOT a way to improve the P/Q rating of a company's brand of multi-featured cameras?Increasing the number of models in the company's line of multi-featured cameras.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?Delivery costs are 2.8% of revenues and represent the company's smallest cost component.One of the benefits of pursuing a strategy of social responsibility and corporate citizenship isan enhanced image rating, provided company spending for socially responsible activities is meaningful and is sustained over a multi-year period.Which of the following is NOT an action company co-managers can take to boost a sub-par ROE?Issue additional shares of stock and use the proceeds to pay down the debt outstanding on the company's line of credit.Which one of the following actions is usually a dependable and appealing way for managers to try to boost their company's EPS?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.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.Are worth careful scrutiny by the managers of all companies because when the bench-marking 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.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$550,000.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 are26.8% and 17.7%.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?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.)Which one of the following actions does NOT result in higher levels of PAT labor productivity in assembling cameras?Avoiding contracting the assembly of cameras to outside suppliers/contractors.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?Increasing total compensation of PAT members to boost their productivity in assembling multi-featured cameras.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.Issue additional shares of stock and use the proceeds to pay down the loans on the company's line of credit.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.)32% debt and 685 equity or 32:68.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?When the market for high-end multi-featured cameras is crowded with companies using more or less copycat differentiation strategies to try to out-compete one another, thus making it difficult for any of these companies to earn attractively high profits.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$23,740 and $94,960.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, thenthe 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).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?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).If a company is being out-competed by various rival companies in the Europe-Africa market for multi-featured cameras and consequently has an unappealing low sales volume and market share in Europe-Africa, then company managers shouldexplore 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.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 arethe 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.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 whenso 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.

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