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Pricing Strategy Financial Analysis Break Even - DOC

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					                         HIGHLINE COMMUNITY COLLEGE
                             BUSN155 - Entrepreneurship
                                   Spring - 2005




Question 1 Multiple Choice                                                               10 points
          A "pushing" promotional strategy is:

                 Designed to promote one item, at a time and place near the actual purchase
                 decision.
                 Designed to encourage the consumer to ask for the product if the retailer does not
                 carry it.
                 Primarily used when goods or services are marketed to the ultimate consumer.

                 Designed to market the product to wholesalers and retailers.

Question 2 Multiple Choice                                                           10 points
          Which of the following groups would have the LEAST interest in the company's financial
          statements?

                  Creditors

                  Customers

                  Potential investors

                  Management

Question 3 Multiple Choice                                                             10 points
          Which of the following would not normally be considered a part of a promotional
          strategy?

                  Product packaging

                  Changes in production capacity

                  Advertising

                  Store displays

Question 4 Multiple Choice                                                           10 points
          The paths that goods and services follow from producer to consumer are known as:

                  The wheel of retailing

                  Distribution channels

                  Transportation networks

                  Logistics
Question 5 Multiple Choice                                                                10 points
          In break-even analysis, the costs that change with the level of sales are called:

                  Recoverable costs

                  Variable costs

                  Labor costs

                  Overhead costs

Question 6 Multiple Choice                                                             10 points
          The Social Club is performing a break-even analysis to determine how many tickets it
          must sell at $15 each to break even on the Holiday Dance. Fixed Costs are $2,000 and
          the Variable Cost per person is $10. How many tickets must be sold in order to break
          even?

                  800

                  500

                  400

                  40

Question 7 Multiple Choice                                                                 10 points
          Pure Products has a new reusable coffee filter that is almost ready to offer for sale. The
          company believes that the Product Life Cycle will be very long for this item, and because
          the product is relatively easy to manufacture they believe that competitors could emerge
          soon after the product introduction. What pricing strategy would you recommend to Pure
          Products?

                  Skimming

                  Cost-based pricing

                  Penetration pricing

                  Psychological pricing

Question 8 Multiple Choice                                                              10 points
          In which stage of the Product Life Cycle do competitors enter the market with similar
          products?

                  Introduction

                  Growth

                  Maturity

                  Decline

Question 9 Multiple Choice                                                               10 points
            When a firm uses $100,000 in cash to pay dividends to owners, Assets will _____ by
            $100,000, and Owners Equity will _____ by $100,000.

                  rise: fall

                  Fall: rise

                  fall: fall

                  rise: rise

Question 10 Multiple Choice                                                              10 points
           Tank Tops Unlimited is conducting a break-even analysis on unbleached cotton tops.
           Fixed Costs are $100,000 and the per-unit contribution to fixed costs is $20. To break
           even, how many tank tops must be sold?

                   20,000 units

                   5,000 units

                   500 units

                   200 units

Question 11 Multiple Choice                                                              10 points
           Which accounting statement is based on the accounting equation?

                   Balance Sheet

                   Income Statement

                   Asset Statement

                   Owners Equity Statement

Question 12 Multiple Choice                                                              10 points
           Betty is considering buying stock in Microsoft. As a user of accounting information, she
           would be most interested in using this information to do what?

                   Plan and control

                   Improve contract negotiations

                   Evaluate credit ratings

                   In order to make an investment decision

Question 13 Multiple Choice                                                             10 points
           Boring, Inc., has $50 million in assets and $30 million in owners equity. How much
           does the firm have in liabilities?

                   $20 million
                   $30 million

                   $50 million

                   $80 million

Question 14 Multiple Choice                                                                10 points
           Choktaw Products buys a $500,000 machine by taking out a bank loan. The
           company's assets will ___ by $500,000, while it's liabilities will ___ by $500,000.

                   increase; decrease

                   increase; increase

                   decrease; increase

                   decrease; decrease

Question 15 Multiple Choice                                                               10 points
           Which of the following assets would be listed first on the assets side of a Balance
           Sheet?

                   Fixed Assets

                   Prepaid Expenses

                   Accounts Receivable

                   Inventory

Question 16 Multiple Choice                                                               10 points
           By definition, all Current Liabilities are due within what time period?

                   30 days

                   90 days

                   180 days

                   One year

Question 17 Multiple Choice                                                          10 points
           If a company sells products on credit, which Balance Sheet account would be affected?

                   Accounts Payable

                   Accounts Receivable

                   Fixed Assets

                   Sales

Question 18 Multiple Choice                                                            10 points
           Anything of value that is used by a company for periods longer than one year is
           considered a(n) ______.
                   Fixed Asset

                   Current Asset

                   Accumulated Depreciation

                   Long-term Debt

Question 19 Multiple Choice                                                             10 points
           Which of the following is NOT included when calculating the quick, or "acid-test" ratio?

                   Cash

                   Inventory

                   Accounts Receivable

                   All of these are used to calculate the ratio.

Question 20 Multiple Choice                                                                 10 points
           Last year a firm had a Current Ratio of 1.5 and a Quick (Acid-test) Ratio of 0.75. This
           year the firm's Current Ratio is 2.0 and it's Quick Ratio is 1.0. This firm's ____ has
           ____.

                   Profitability; Improved

                   Liquidity; Deteriorated.

                   Liquidity; Improved

                   Profitability; Deteriorated

Question 21 Multiple Choice                                                               10 points
           Which of the following are designed to indicate how successful a firm is in terms of its
           earnings as compared with its assets or owners equity.

                   Liquidity Ratios

                   Activity Ratios

                   Profitability Ratios

                   Debt Ratios.

Question 22 Multiple Choice                                                                10 points
           All of the following are cash inflows except ______.

                   Cash sales.

                   Loan proceeds.

                   Collection of Accounts Receivable

                   Sales on Credit
Question 23 Multiple Choice                                                                 10 points
           Many retailers have seasonal sales - sales are heaviest during the last three months of
           the year. Given that retailers have to build up inventories in anticipation of sales, in
           which quarter will many retailers experience significantly negative cash flow?

                   First: January through March

                   Second: April through June

                   Third: July though September

                   Fourth: October through December

Question 24 Multiple Choice                                                               10 points
           A Business Plan ________.

                   Is meant to be looked at once a year.

                   Should be used when developing business strategies.

                   Is only needed if you are borrowing money.

                   Is not as important as aMarketing Plan.

Question 25 Multiple Choice                                                         10 points
           At year-end, Cost of Goods Sold is $150,000. Beginning Inventory was $20,000, and
           Purchases were $160,000 during the year. What is the Inventory Turnover Ratio?

                   8

                   10

                   6

                   Not enough information

Question 26 Multiple Choice                                                               10 points
           The purpose of Inventory Management is:

                   To have inventory when you need it.

                   To not tie up too much capital in inventory.

                   To make sure quality of purchased items is consistent.

                   All of these.

Question 27 Multiple Choice                                                             10 points
           I have friends across the country who are operating exactly the same type of store as I
           am, selling the same type of goods. We meet once a year to compare notes, and this
           year I found out that everyone else has an Inventory Turnover Ratio of 6, while mine is
           only 3. What might I learn from this?

                   My inventory level is too high compared to my friends.
                   My prices are too high compared to my friends.

                   My sales are lower compared to my friends.

                   All of the above.

Question 28 Multiple Choice                                                            10 points
           The benefits of utilizing a web site include which of these?

                   Increased sales of products, lower marketing costs.

                   I can decrease my sales tax bill.

                   I can decrease my product liability insurance.

                   I can reduce the time I spend managing my business.

Question 29 Multiple Choice                                                            10 points
           The biggest concern of shoppers on the internet is____.

                   That prices will be higher than if they bought the items locally.

                   Privacy and security.

                   Availability of different styles and colors.

                   Shipping costs.

Question 30 Multiple Choice                                                            10 points
           The biggest reason customers are lost is:

                   They move away.

                   They find the item cheaper elsewhere.

                   We ignore them.

                   They have a friend who recommends that they try some other company.

				
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