CompXM Final Exam Questions With Answers

CompXM Final Exam Questions With Answers How do you increase your stock price? (3) - ANSWER- 1. Increase EPS 2. Retire stock 3. Issue a dividend How do you find EPS? - ANSWER- Net Profit / # shares outstanding What is the prime rate? - ANSWER- The interest rate commercial banks charge their most credit worthy customers. How do you find the number of months of inventory you have left? (3) What should be your ideal inventory supply? - ANSWER- 1. Inventory (balance sheet) / Avg. monthly sales 2. (Inventory / Sales) * 12 3. (Unit Inventory / Unit Sales) * 12 [Average monthly sales = sales / 12 ] Around 3 months What is included in SG&A expenses? (4) - ANSWER- 1. R & D 2. Promotion budget 3. Sales budget 4. Administrative expenses Under which strategy do firm's spend more on SG&A expenses as a percentage of sales? - ANSWER- Differentiators How do you find the amount of units a firm missed selling for a particular product? (2 steps) - ANSWER- 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) - ANSWER- 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) - ANSWER- 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) - ANSWER- 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) - ANSWER- 1. Reliability 2. Position (performance and size) 3. Age What are the aspects considered under a product's "place" factor? - ANSWER- Promotion budget What are the aspects considered under a product's "promotion" factor? - ANSWER- Sales budget Customer awareness deals with what? What about customer accessibility? - ANSWER- Awareness: Promotion budget Accessibility: Sales budget For a product to be a worthy competitor it must have a survey score over what? - ANSWER- 5 How can you tell how many different products are emerging next year? - ANSWER- No sales but have both capacity and automation How do you find ROS? - ANSWER- Profit / Sales What does ROS represent? (5) What kind of strategy usually has a high ROS? - ANSWER- 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? - ANSWER- 1. ROS 2. Asset turnover (above 1) 3. ROA 4. Leverage (1.8 - 2.8) 5. ROE