COMP XM QUIZ TEST EVALUATION EXAM QUESTIONS
WITH ANSWERS 2025/2026 GRADED A+
How do you find the amount of units a firm missed selling for a particular product? (2
steps) - 1. Potential market share for specific product - total actual market share from
2. Multiply the result by the total potential market share for all segments
How do you find the amount a firm's EBIT would have increased if they would not have
stocked out of a specific product? (3 steps) - 1. Find the amount of units the product
missed selling
2. Multiply the result by the product's price
3. Multiply the result of #2 by the product's CM
An assembly line with higher automation usually has what? (4) - 1. Fewer workers
2. Lower labor costs
3. Higher profits
4. Longer R&D revisions
What does is mean to have an automation of 1?
What about 7?
What does each level represent? (2) - level of 1:
- 1 machine and 10 workers
level of 7:
- 7 machines and 4 workers
Each additional unit = 10% decrease in labor costs
Each additional unit = ($4 * capacity) COST OF AUTOMATION
What are the aspects considered under a product's "product" factor? (3) - 1. Reliability
2. Position (performance and size)
3. Age
What are the aspects considered under a product's "place" factor? - Promotion budget
What are the aspects considered under a product's "promotion" factor? - Sales budget
Customer awareness deals with what?
What about customer accessibility? - Awareness: Promotion budget
Accessibility: Sales budget
For a product to be a worthy competitor it must have a survey score over what? - 5
,How can you tell how many different products are emerging next year? - No sales but
have both capacity and automation
How do you find ROS? - Profit / Sales
What does ROS represent? (5)
What kind of strategy usually has a high ROS? - 1. Profit margin
2. % of every sales dollar that is profit
3. Indicator of competition within an industry
4. How hard we are working each dollar of sales
5. A pure income statement relationship
Strategy: differentiation with premium pricing
What makes up the DuPont Chain? (5)
What should they typically be? - 1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6) - 1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What is a low CM caused by?
How can you increase your CM? - CAUSED BY:
1. Price too low
2. Variable expenses too high (labor, material, inventory carry)
INCREASE BY:
1. Increase price
2. Increase automation (lower labor costs)
3. Lower MTBF and position (lower material costs)
4. Forecast better (lower inventory carrying costs)
How do you find the asset turnover rate?
What does it represent? (2) - Sales / Total assets
, 1. An efficiency measure
2. How hard we are working our assets to produce sales
What can cause a firm's low asset turnover? (4) - 1. Too much cash
2. Too high A/R
3. Too high inventory
4. Too much (idle) capacity/automation
How do you find a firm's A/R outstanding balance? - (AR / Sales) * 365
How do you find ROA? (2)
What does it represent? (2) - 1. Profit / Assets
2. ROS * asset turnover
Represents:
1. How good the company is at producing wealth with their assets
2. Comparison of the profits produced by firm and the asset base
What can case a low ROA? - Low ROS
1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What does leverage tell us? - 1. How a firm funds their assets
2. Dollars of assets owned per dollar invested by equity holders.
How do you find a firm's ROE?
What does it represent? (3) - ROE = Profit / Equity
Represents:
1. How efficiently a company uses the dollars invested by its stockholders
2. one of the most useful statistics
3. The rate of return the company is producing for its owners
How do you find the CM? - Sales - Variable costs
What is included in variable costs? (4) - 1. labor
2. material
3. inventory carrying
WITH ANSWERS 2025/2026 GRADED A+
How do you find the amount of units a firm missed selling for a particular product? (2
steps) - 1. Potential market share for specific product - total actual market share from
2. Multiply the result by the total potential market share for all segments
How do you find the amount a firm's EBIT would have increased if they would not have
stocked out of a specific product? (3 steps) - 1. Find the amount of units the product
missed selling
2. Multiply the result by the product's price
3. Multiply the result of #2 by the product's CM
An assembly line with higher automation usually has what? (4) - 1. Fewer workers
2. Lower labor costs
3. Higher profits
4. Longer R&D revisions
What does is mean to have an automation of 1?
What about 7?
What does each level represent? (2) - level of 1:
- 1 machine and 10 workers
level of 7:
- 7 machines and 4 workers
Each additional unit = 10% decrease in labor costs
Each additional unit = ($4 * capacity) COST OF AUTOMATION
What are the aspects considered under a product's "product" factor? (3) - 1. Reliability
2. Position (performance and size)
3. Age
What are the aspects considered under a product's "place" factor? - Promotion budget
What are the aspects considered under a product's "promotion" factor? - Sales budget
Customer awareness deals with what?
What about customer accessibility? - Awareness: Promotion budget
Accessibility: Sales budget
For a product to be a worthy competitor it must have a survey score over what? - 5
,How can you tell how many different products are emerging next year? - No sales but
have both capacity and automation
How do you find ROS? - Profit / Sales
What does ROS represent? (5)
What kind of strategy usually has a high ROS? - 1. Profit margin
2. % of every sales dollar that is profit
3. Indicator of competition within an industry
4. How hard we are working each dollar of sales
5. A pure income statement relationship
Strategy: differentiation with premium pricing
What makes up the DuPont Chain? (5)
What should they typically be? - 1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6) - 1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What is a low CM caused by?
How can you increase your CM? - CAUSED BY:
1. Price too low
2. Variable expenses too high (labor, material, inventory carry)
INCREASE BY:
1. Increase price
2. Increase automation (lower labor costs)
3. Lower MTBF and position (lower material costs)
4. Forecast better (lower inventory carrying costs)
How do you find the asset turnover rate?
What does it represent? (2) - Sales / Total assets
, 1. An efficiency measure
2. How hard we are working our assets to produce sales
What can cause a firm's low asset turnover? (4) - 1. Too much cash
2. Too high A/R
3. Too high inventory
4. Too much (idle) capacity/automation
How do you find a firm's A/R outstanding balance? - (AR / Sales) * 365
How do you find ROA? (2)
What does it represent? (2) - 1. Profit / Assets
2. ROS * asset turnover
Represents:
1. How good the company is at producing wealth with their assets
2. Comparison of the profits produced by firm and the asset base
What can case a low ROA? - Low ROS
1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What does leverage tell us? - 1. How a firm funds their assets
2. Dollars of assets owned per dollar invested by equity holders.
How do you find a firm's ROE?
What does it represent? (3) - ROE = Profit / Equity
Represents:
1. How efficiently a company uses the dollars invested by its stockholders
2. one of the most useful statistics
3. The rate of return the company is producing for its owners
How do you find the CM? - Sales - Variable costs
What is included in variable costs? (4) - 1. labor
2. material
3. inventory carrying
