Question Details

WHERE APPLICABLE, SHOW ALL OF YOUR WORK. Answers without any work that demonstrates how there were found will not be graded. Multiple choice questions are the only exceptions.

There are 8 multiple choice questions. Each question is worth 5 points.

Questions 9, 10, 11 and 12 are worth 15 points each. SHOW ALL OF YOUR WORK


 
1.	Generally, entrepreneurs should avoid head-to-head price competition with other firms that can more easily achieve lower prices through:
	a.	offering lower value products and services.
	b.	a better designed Web site.
	c.	geographic advantages.
	d.	lower cost structures.




2.	Ultimately, the “right” price for a product or service depends on one factor:
	a.	the lowest price possible.
	b.	premium prices.
	c.	the value that it provides for a customer.
	d.	the most effective advertising campaign.




3.	The __________ represents a “snapshot” of a business, showing an estimate of its value on a given date, while the ________ is a “moving picture” of the firm- profitability over time.
	a.	balance sheet; income statement
	b.	income statement; balance sheet
	c.	statement of cash flows; income statement
	d.	balance sheet; statement of cash flows



4.	The first step in managing cash more effectively is:
	a.	having an adequate cash reserve for emergency expenditures.
	b.	rapid payment of accounts payable.
	c.	speeding up payment of accounts receivable.
	d.	understanding the company's cash flow cycle.

5.	The Fair Debt Collection Practices Act prohibits business owners from:
	a.	harassing people who are past due.
	b.	sending invoices the same day product is shipped.
	c.	hiring debt collection attorneys.
	d.	referring past due bills to collection agencies.


 




Refer to the following information to answer questions 6-8 regarding Port Royal:


	Net sales		$927,641
	Gross profit		$301,483
	Net profit		$48,457
	Total assets		$203,869
	Total liabilities		$74,325


6.		Port Royal's debt-to-net worth ratio is:
	a.	0.36:1.
	b.	0.08:1.
	c.	1.57:1.
	d.	0.57:1.


7.		Port Royal's profit margin on sales is:
	a.	5.2 percent.
	b.	32.5 percent. 
	c.	16.1 percent.
	d.	8.0 percent.


8.		Port Royal's net profit-to-equity ratio is:
	a.	23.8 percent.
	b.	37.4 percent.
	c.	16.1 percent.
	d.	232.7 percent.



9.	Macy- buys white, pinpoint oxford blouses at $14 each and sells them at $30 each.  Macy- percentage (of cost) markup is:





10.	Pandecker, Inc., estimates the variable costs of producing one unit to be $11.26.  The company plans to produce 26,500 units.  The fixed costs the company expects to incur are $82,770.  If Pandecker- profit target is $75,000, what price should it charge?


11.	You are to prepare a projected income statement for a proposed business venture.  Your desired income is $28,000 and you have the following published statistics:  
			Costs of goods sold  =  56.9 percent of net sales
			Operating expenses  =  37.1 percent of net sales
			Gross profit margin  =  43.1 percent of net sales
	This information indicates the net sales on your pro forma “P & L” (income statement) would be:








12.	Gunther's Emporium expects net sales of $2,396,919 for the upcoming year, with variable expenses totaling $1,813,443 and fixed expenses of $412,190.


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