MULTIPLE CHOICE
1.Determining how to price a company's products is a(n)
a.financial reporting decision
b.operating decision
c.financing decision
d.investing decision
2.Companies will usually compete on the basis of price when
a.the product market is highly competitive
b.their products can be differentiated by special features
c.customers are willing to pay for special features
d.prices are set at a high level
3.The price a company charges for its product depends on
a.how much customers are willing to pay
b.how long the product lasts
c.the decision of the Board of Directors
d.the economic conditions of the country
4.Which of the following statements is NOT true?
a.return on assets is a simple measure for evaluating how well a firm is utilizing its assets to generate profits
b.return on assets is equal to net income divided by total assets
c.return on assets is a combination of profit margin and asset turnover
d.return on assets measures performance using cash-based net income
5.Which of the following is a measure of the company's ability to create profit from existing sales?
a.operating decision
b.asset turnover
c.profit margin
d.return on assets
6.Which of the following statements is NOT true?
a.asset turnover is a measure of efficiency
b.asset turnover is the ratio of operating revenues to total assets
c.asset turnover is a measure of a firm's ability to generate sales from its investment in assets
d.asset turnover is a component of return on assets
7.Which of the following is a measure of the company's ability to generate profits from existing assets?
a.return on assets
b.profit margin
c.asset turnover
d.sales revenue
8.Which of the following statements is NOT true?
a.profit margin is the ratio of net income to operating revenues
b.profit margin is a measure of a company's ability to generate profit from its sales
c.profit margin is a measure of effectiveness
d.profit margin is a component of return on assets
Figure 13-1
Opie Technologies Bea Corporation
Operating revenues$375,000$355,000
Operating income71,00054,000
Net income60,00042,500
Total assets625,000490,000
9.Refer to the table in Figure 13-1. What is the profit margin for Opie Technologies?
a.12.0%
b.18.9%
c.15.2%
d.16.0%
10.Refer to the table in Figure 13-1. What is return on assets for Bea Corporation?
a.11.0%
b.11.4%
c.8.7%
d.9.6%