Deck 22: Financial Analysis in Marketing

Question 1

Depreciation is an unusual expense because it does not involve an actual cash expense.

Answer 1

True

Question 2

Receivables are collected credit sales.

Answer 2

False

Question 3

The gross profit margin is the percentage of each sales dollar that a firm earns in profit after all expenses have been paid.

Answer 3

False

Question 4

Venus Inc.,a software consultancy firm,had depreciation of $20.8 million and a net interest expense of $3.2 million for the past year.The firm's operating profit for the same year was $319.0 million.What was the firm's taxable income for the past year?

A) $400 million
B) $299.2 million
C) $295 million
D) $316.8 million

Question 5

Venus Inc.,a software consultancy firm,had made a gross profit of $350.0 million for the year 2012.For the same year,it had made sales of $890.0 million.What was its gross profit margin?

A) 69.32%
B) 59.32%
C) 49.32%
D) 39.32%

Question 6

The difference between assets and liabilities of a company is referred to as owner's equity.

Question 7

A balance sheet contains more marketing-related information than an income statement.

Question 8

Subtracting depreciation and net interest expense from the firm's operating profit reveals the firm's taxable income.

Question 9

Which of the following statements is true of markup?

A) A marketer's markup exerts no influence on its image as perceived by customers.
B) Retailers who offer more services charge larger markups to cover their costs.
C) Markups typically are stated as percentages of net interest expenses.
D) Retailers with a lower turnover rate can make a profit by charging a smaller markup.

Question 10

Explain the difference between an income statement and a balance sheet.

Question 11

What is a markup? What are the two marketing decisions that decide the amount of markup? Explain why a markup is important to a marketer.

Question 12

Which of the following profitability ratios measures the firm's efficiency in generating sales and profits from the total amount invested in the company?

A) Inventory turnover
B) Gross profit margin
C) Return on assets
D) Net interest expense

Question 13

While calculating the accounts receivable turnover ratio,sales to buyers using credit cards like MasterCard and Visa are counted as credit sales because the seller is providing credit to the buyer who buys without cash.

Question 14

Calculate the markdown if a retailer decides to reduce the price of an item from $45 to $38 and sells 500 units.

A) 7%
B) 18.42%
C) 15.56%
D) 9%

Question 15

In the context of financial statements,which of the following represents the systematic reduction over time in the value of certain company assets?

A) Depreciation
B) Attrition
C) Recession
D) Deduction

Question 16

Cost of goods sold represents the revenue a firm receives from goods sold to customers.

Question 17

All successful organizations have the same inventory turnover ratio.

Question 18

An income statement is a snapshot of what a company owns (called assets)and what it owes (called liabilities)at a point in time.