finance data bank

| August 14, 2017

21. A
measure of the manager’s ability to control expenses and increase revenues
in order to improve profitability is:

A.
Residual income (RI) divided by level of
invested capital.
B.
Return on equity (ROE).
C.
Return on investment (ROI).
D.
Return on sales (ROS).
E.
Asset turnover (AT).

22.
A
measure of the manager’s ability to produce increased sales from a given
level of investment is:
A.
Residual income (RI) divided by level of
invested capital.

B.
Return on equity (ROE).
C.
Return on investment (ROI).
D.
Return on sales (ROS).
E.
Asset turnover (AT).

28.
The
historical cost of an asset less its accumulated depreciation is:
A.
Net book value (NBV).
B.
Return on equity (ROE).
C.
Return on investment (ROI).
D.
A rough measure of current replacement
cost of the asset.
E.
An estimate of liquidation value of the
asset.

29.
Replacement
cost of a division’s assets will most probably be greater than:
A.
Gross book value (GBV) of the assets.

B.
Historical cost of the assets.
C.
Liquidation value of the assets.
D.
Price-level adjusted cost of the assets.

E.
Current cost of the assets.

30. Which
one of the following is not a limitation shared by residual income (RI)
and return on investment (ROI) divisional performance measures?

A.
They are both short-term performance
indicators.
B.
They both may fail to capture
significant value-creating activities of the organization.
C.
They are both subject to short-term
manipulation on the part of divisional managers.
D.
Both are subject to a number of
measurement issues that complicate their use in practice.
E.
They both relate, in percentage terms,
earnings to the level of investment in each division.

31.
The
estimated cost to replace assets at the current level of service and
functionality is defined as:
A.
Gross book value.

B.
Historical cost, plus accumulated
depreciation to date.
C.
Liquidation value.
D.
Replacement cost.
E.
Price-level adjusted original cost.

32.
The
estimated price that could be received for the sale of divisional assets is
referred to as:
A.
Gross book value (GBV), plus accumulated
depreciation to date.
B.
Gross book value (GBV).
C.
Price-level adjusted cost.
D.
Replacement cost.
E.
Liquidation value.

33. A
dollar amount equal to the operating income of a division less a charge for the
level of investment in the division is called:

A.
Operating profit after tax.
B.
Return on investment (ROI).
C.
Earnings from continuing operations.
D.
Return on equity (ROE).
E.
Residual income (RI).

34.
A division’s after-tax cash operating
income less depreciation and less an imputed cost of capital is called its:

A.
After-tax operating income.
B.
Income from continuing operations.
C.
Return on sales (ROS).
D.
Economic value added (EVA®).
E.
Residual income (RI).

35.
ROI,
though widely used, is subject to which one of the following limitations?
A.
ROI cannot incorporate differences in
risk across different divisions.

B.
ROI ignores the amount of capital
invested in a division.
C.
ROI may not capture value-creation for
firms operating in capital-intensive industries.

D.
ROI may motivate managers to take
suboptimal decisions from the standpoint of the organization as a whole.

E.
ROI cannot be used to judge the
performance of units of different size.

36.
All
of the following are listed as possible transfer pricing methods except:

A.
Market price.
B.
Variable cost.
C.
Fixed cost.
D.
Full cost.
E.
Negotiated price.

37. Which
one of the following establishes an “arm’s-length price” by using the
sales prices of similar products made by unrelated firms?

A.
Wholesale-price method.
B.
Retail-price method.
C.
Related-products method.
D.
Cost-plus method.
E.
Comparable-price method.

38.
Which one of the following transfer
pricing alternatives is based on determining an appropriate markup, where the
markup is based on gross profits of unrelated firms selling similar products?

A.
Wholesale-price method.
B.
Resale-price method.
C.
Net-price method.
D.
Cost-plus method.
E.
Comparable-price method.

39.
Which one of the following determines
the transfer price based on the seller’s costs, plus a gross profit percentage
determined from comparison of sales of the seller to those of unrelated
parties?

A.
Wholesale-price method.
B.
Resale-price method.
C.
Net-price method.
D.
Cost-plus method.
E.
Comparable-price method.

Consider the following data for
three divisions of a company, X, Y, and Z:
.jpg”>

40.
The
return on investment (ROI) for Division X is:
A.
8.0%.

B.
12.0%.
C.
20.0%.
D.
25.0%.
E.
40.0%.

41.
The
return on investment (ROI) for Division Y is:
A.
8.0%.

B.
12.0%.
C.
20.0%.
D.
25.0%.
E.
40.0%.

42.
The
return on investment (ROI) for Division Z is:
A.
8.0%.

B.
12.0%.
C.
20.0%.
D.
25.0%.
E.
40.0%.

43.
The
return on sales (ROS) for Division X is:
A.
5.0%.
B.
8.0%.
C.
12.0%.
D.
14.0%.
E.
20.0%.

44.
The
return on sales (ROS) for Division Y is:
A.
5.0%.

B.
8.0%.
C.
12.0%.
D.
14.0%.
E.
20.0%.

45.
The
return on sales (ROS) for Division Z is:
A.
5.0%.

B.
8.0%.
C.
12.0%.
D.
14.0%.
E.
20.0%.

46.
The
asset turnover (AT) for Division X is (rounded):
A.
1.43.

B.
1.60.
C.
1.67.
D.
2.86.
E.
3.33.

47.
The
asset turnover (AT) for Division Y is calculated to be (rounded):
A.
1.43.

B.
1.60.
C.
1.67.
D.
2.86.
E.
3.33.

48.
The
asset turnover (AT) for Division Z is:
A.
1.43.

B.
1.60.
C.
1.67.
D.
2.86.
E.
3.33.

Consider the following data from
two divisions of a company, P and Q:
.jpg”>

49.
If
the minimum rate of return is 11%, what is Division P’s residual income (RI)?
A.
$160,000.

B.
$1,040,000.
C.
$1,060,000.
D.
$1,434,000.
E.
$3,934,000.

50.
If
the minimum rate of return is 11%, what is Division Q’s residual income (RI)?
A.
$147,500.
B.
$490,000.
C.
$752,000.
D.
$950,000.
E.
$1,049,500.

Order your essay today and save 30% with the discount code: ESSAYHELPOrder Now