MAN 4752 CompXM Exam |Questions
with Complete Solutions Rated A+
What makes up the DuPont Chain? (5)
What should they typically be? - Ans 1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6) - Ans 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? - Ans 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) - Ans 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) - Ans 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? - Ans (AR / Sales) * 365
How do you find ROA? (2)
What does it represent? (2) - Ans 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? - Ans 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? - Ans 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) - Ans 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? - Ans Sales - Variable costs
What is included in variable costs? (4) - Ans 1. labor
with Complete Solutions Rated A+
What makes up the DuPont Chain? (5)
What should they typically be? - Ans 1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6) - Ans 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? - Ans 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) - Ans 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) - Ans 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? - Ans (AR / Sales) * 365
How do you find ROA? (2)
What does it represent? (2) - Ans 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? - Ans 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? - Ans 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) - Ans 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? - Ans Sales - Variable costs
What is included in variable costs? (4) - Ans 1. labor
