Glo Bus Quiz 2 - Glo bus Quiz PDF

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GLO-BUS Quiz 2 Answers The highlighted red answers are the ones that are correct. The simplest way of navigating through this document is to press find and put down a very unique quote from the question on GB. For example to find the answer for the question below would be the find the quote “companies can expect to sell”. Make sure it is 100% the same question and answers and you will do very well on this quiz. Some questions have similar wording and the question may be further down the document. Another way to navigate the document is via the answers. I strongly suggest though that before you actually do the quiz, just skim through the questions and familiarize yourself with the answers as there is a time limit when you actually do the quiz. GB Quiz 2 is substantially harder than Quiz 1, this quiz also brings about the introduction of what I view as “concept” questions. These are questions that can be asked in several different ways, but is more or less the same concept. For example exchange rate questions are important in testing your knowledge in GB, and they can be asked in a variety of different ways. For some of the questions that can be conceptualized in different ways I have written a few notes that helped me figure out the answer when I encountered it in another form and it is usually those balance sheet questions because GB is very particular (sometimes illogical) in how they calculate their values. Make sure that the question you are answering is EXACTLY the question in the quiz bank. Some questions look very similar. If you find the odd quiz Answers that isn’t in the bank, feel free to send them in. According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a $24,000 annual compensation package, utilizes no overtime, employs 200 PATs, spends $1,500 per quarter for training and productivity improvement for each PAT, incurs no severance expenses, and has annual PAT productivity of 12,000 cameras, then the company's in-house labor cost per camera assembled at regular time (no use of overtime) would be $8.67

$8.50

$8.00

$2.00

None of these

According to the depreciation rates used by the company and described in the Production Cost Report, if a company adds 55 new workstations at a cost of $250,000 each and also spends $5 million for an addition to its assembly plant to accommodate the new workstations, then its annual depreciation costs will rise by

$750,000

$1,875,000

$187,500

$200,000

None of these

According to the cost allocation methods used in the company’s accounting system and described in the Help section for the Operations Report for any of the four geographic regions, your company's administrative expenses are allocated equally to each of the four geographical regions.

allocated to each of the four geographic regions based on each region’s percentage contribution to total companywide revenues. allocated to each of the four geographic regions according to their respective percentages of total cameras sold and then allocated between sales of entry-level cameras and multi-featured cameras within each region according to their respective percentages of total cameras sold. allocated between entry-level cameras and multi-featured cameras according to their respective percentages of total companywide revenues. None of the above accurately describe the manner in which the company’s administrative expenses are allocated.

Given the following Financial Statement data: Income Statement Data

Quarter 1

(in 000s) Sales Revenues

$50,000

Operating Profit

14,400

Net Income

$9,555

Balance Sheet Data Total Current Assets

$70,000

Total Assets

163,000

Total Current Liabilities

40,000

L-T Debt (draw against credit line)

23,000

Total Equity

90,000

Other Financial Data Depreciation

$4,000

Dividend payments

$2,250

Based on the above figures, the company’s current ratio (defined as current assets divided by current liabilities, as per the Help screen for the Comparative Financial Performance page of the GSR) is 2.69

$30,000

0.57

1.75

None of these

Given the following Financial Statement data:

Income Statement Data

Full Year

(in 000s) Sales Revenues

$200,000

Operating Profit

42,600

Net Income

$27,300

Balance Sheet Data Total Current Assets Total Current Liabilities Total Assets

$70,000 26,000 179,000

L-T Debt (draw against credit line)

63,000

Total Equity

90,000

Other Financial Data Depreciation Dividend payments

$4,000 $10,000

Based on the above figures, the company’s debt payback period (the number of years required to pay off loans outstanding; see the discussion on the Help screen for the Comparative Financial Performance page of the GSR for more details of how to calculate the debt payback period) is 2.31 years

2.01 years

5.29 years

2.96 years

None of these

According to the cost allocation methods used in the company’s accounting system and described in the Help section for the Operations Report for any of the four geographic regions, if a company spends $6 million to advertise its camera lines in North America, assembles and ships 300,000 entry-level cameras and 150,000 multi-featured cameras to its North American dealers, derives revenues of $45 million from its sales of entry-level cameras and $55 million from the sales of its multi-featured cameras, then 50% of the $6 million in advertising expenditures will be allocated to the costs of advertising for entry-level cameras and 50% will be allocated to the costs of multi-featured cameras. 45% of the $6 million in advertising expenditures will be allocated to the costs of advertising for entry-level cameras and 55% will be allocated to the costs of multi-featured cameras. the per camera advertising costs for entry-level cameras will be $13.33 and the per camera advertising costs for multi-featured cameras will also be $13.33. the per camera advertising costs for entry-level cameras will be twice as large as the per camera advertising costs for multi-featured cameras. advertising costs for entry-level and multi-featured cameras will be 4% of camera revenues in North America. Which of the following is not an action company co-managers should seriously consider in trying to improve the company’s credit rating? You may wish to consult the discussion of the credit rating that appears on the Help screen for the Comparative Financial Performance page of the GSR in answering this question. Strive to increase net income, which should help increase the company’s free cash flow (bigger free cash flows lower the number of years it takes to pay back the loans outstanding on the company’s line of credit) Reduce dividends and use the extra cash to pay down the loans outstanding on the company’s line of credit

Issue additional shares of stock and use the proceeds to pay down the loans on the company’s line of credit Repurchase shares of the company’s stock and/or raise the dividend

Alternative could be Raising the Dividend Strive to boost operating profits (higher operating profits boost the company’s times interest earned ratio) As can be seen from the numbers in the Production Cost Report, the biggest percentage of your company’s total production costs for multi-featured cameras is for new product development

core components, brand specific components, and special utility features

labor costs

warranty costs

depreciation

f a company earns net income of $35 million in Year 8, has 10 million shares of stock, pays a dividend of $1.50 per share, and has annual interest costs of $15 million, then the company would have Year 9 retained earnings of $10 million.

the company's retained earnings for Year 8 would be $35 million.

the company's earnings per share would equal $2.50.

the company's retained earnings for Year 8 would be $5 million (net income of $35 million less dividend payments of $15 million less $15 million in interest payments). the company would have Year 8 retained earnings of $20 million (net income of $35 million less dividend payments of $15 million). According to the cost allocation methods used in the company's accounting system that are described in the Production Cost Report, if a company employs 100 PATs at a total labor cost of $12,000,000 (including wages, fringes, incentives, overtime, training, and severance expenses), assembles and ships 900,000 entry-level cameras and 300,000 multi-featured cameras over the course of a year, has revenues of $100 million from sales of entry level cameras, and revenues of $100 million from the sale of multi-featured cameras, then the total annual labor costs allocated to the assembly and shipment of entry-level cameras and the labor costs per entry-level camera assembled and shipped, respectively, will be

$6,000,000 and $6.67.

$9,000,000 and $10.00.

$6,000,000 and $20.00.

$9,600,000 and $12.00.

$3,000,000 and $10.00.

Given the following Financial Statement data: Income Statement Data

Full Year

(in 000s) Sales Revenues

$200,000

Operating Profit

57,600

Net Income

$35,200

Balance Sheet Data Total Current Assets

$70,000

Total Assets

172,000

Total Current Liabilities

26,000

L-T Debt (draw against credit line)

46,000

Total Equity

100,000

Other Financial Data Depreciation Dividend payments Annual dividend per share

$16,000 $8,000 $0.80

Number of shares outstanding

10,000

Current stock price

$32.00

Based on the above figures, the company’s EPS and dividend yield (see the discussion on the Help screen for the Comparative Financial Performance page of the GSR for more details if you are unsure how to calculate these statistics) are $3.52 and 2.5%.

$2.82 and 4.6%.

$4.45 and 5.6%.

$3.82 and 2.1%.

$3.52 and 22.7%.

Assume a company’s Income Statement for a given period has the following entries: Income Statement Data

Quarter 1

(in 000s) Sales Revenues Production Costs

$50,000 29,900

Delivery Costs

1,600

Marketing Costs

8,500

Administrative Expenses

2,000

Operating Profit Net Interest Income Before Taxes Taxes

8,000 750 10,250 3,075

Net Income

$7,175

Based on the above income statement data, the company’s operating profit margin (defined as operating profit divided by sales revenues, as per the Help screen for the Comparative Financial Performance page of the GSR) is 28.8%

26.8%

29.0%

14.35%

None of the above

Assume a company’s Income Statement for a given period has the following entries:

Income Statement Data

Quarter 1

(in 000s) Sales Revenues Production Costs

$50,000 26,500

Delivery Costs

1,600

Marketing Costs

8,500

Administrative Expenses

2,000

Operating Profit Net Interest Income Before Taxes Taxes

14,400 2,750 11,650 3,495

Net Income

$8,155

Given the above figures, the company’s net profit margin (defined as net income divided by sales revenues, as per the Help screen for the Comparative Financial Performance page of the GSR) is 16.3%

18.8%

17.7%

19.1%

None of these

Given the following Financial Statement data:

Income Statement Data

Quarter 1 (in 000s)

Sales Revenues

$50,000

Operating Profit

14,400

Net Income

$9,555

Balance Sheet Data Total Current Assets

$70,000

Total Assets

149,000

Total Current Liabilities

26,000

L-T Debt (draw against credit line)

33,000

Total Equity

90,000

Other Financial Data Depreciation

$4,000

Dividend payments

$2,250

Based on the above figures, the company’s capital structure consists of what debt and equity percentages? (These percentages are one of the components used in determining the company’s credit rating, as explained on the Help screen for the Comparative Financial Performance page of the GSR.) 20% debt and 80% equity or 20:80.

27% debt and 73% equity or 27:73.

35% debt and 65% equity or 35:65.

37% debt and 63% equity or 37:63.

None of these.

Given the following Financial Statement data: Income Statement Data

Full Year

(in 000s) Sales Revenues

$200,000

Operating Profit

57,600

Net Income

$38,220

Balance Sheet Data Total Current Assets

$70,000

Total Assets

172,000

Total Current Liabilities

26,000

L-T Debt (draw against credit line)

46,000

Total Equity

100,000

Other Financial Data Depreciation

$16,000

Dividend payments

$9,000

Based on the above figures, the company’s return on equity (defined as net income divided by total equity investment of stockholders, as per the Help screen for the Comparative Financial Performance page of the GSR) is (Very similar questions look like this. 28.8%

27.5%

38.2%

22.1%

None of the above

According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a base wage of $19,000, a $50 quarterly bonus for perfect attendance, and annual fringe benefits of $3,200, if a PAT is paid a $1 incentive bonus per camera assembled, and if a PAT assembles 11,000 cameras per year (or 2,750 cameras per quarter), then the annual compensation cost of a single PAT member and a fully-staffed PAT would be $19,000 and $57,000

$25,150 and $100,600

$33,400, and $133,600

$31,200 and $124,800

None of these

If in a given year a company spends $2 million on new product development, design, and engineering for its entrylevel camera line; $4 million on new product development, design, and engineering for its multi-featured camera line; assembles and ships 1,000,000 entry-level cameras and 200,000 multi-featured cameras, then the company’s production costs for new product development expenditures for multi-featured cameras would be (very similar question with entry level is also present) capitalized and depreciated over the next five years, thus producing an average cost of $4.00 annually for each of the next five years

$5.00 per camera

$2.00 per camera

$4.00 per camera

$20.00 per camera

Assume a company’s Income Statement for a given quarter is as follows: Income Statement Data

Quarter 1

(in 000s) Sales Revenues Production Costs

$50,000 26,500

Delivery Costs

1,600

Marketing Costs

8,500

Administrative Expenses

2,000

Operating Profit

14,400

Net Interest

750

Income Before Taxes

13,650

Taxes

4,095

Net Income

$9,555

Based on the above data, which of the following statements is false? Production costs are 53% of revenues, thus resulting in a gross profit margin (sales revenues less costs of goods sold) of 47% Delivery costs are 3.2% of revenues and are the company’s smallest operating cost

Marketing costs are 20.0% of revenues

Administrative expenses are 4.0% of revenues

Net interest costs are 1.5% of revenues

Which of the following is not an action company co-managers can take to boost a subpar ROE? Increase dividend payments so as to reduce the amount of net income retained in the business (retained earnings act to increase equity investment and thus dampen ROE)

Decrease the dividend payment so as to boost the amount of earnings retained in the business

Issue additional shares of stock and use the proceeds to pay down the debt outstanding on the company’s line of credit (is an alternative answer) Strive to boost the company’s net income

Use available cash (or perhaps borrow against the company’s line of credit) to repurchase shares of stock

None of these

Given the following Financial Statement data: Income Statement Data

Full Year (in 000s)

Sales Revenues

$200,000

Operating Profit

42,000

Net Interest

9,500

Net Income

$22,750

Balance Sheet Data Total Current Assets

$70,000

Total Assets

139,000

Total Current Liabilities

26,000

L-T Debt (draw against credit line)

23,000

Total Equity

90,000

Other Financial Data Depreciation Dividend payments

$16,000 $9,000

Based on the above figures, the company’s times interest earned ratio (one of the components used in determining the company’s credit rating and defined as operating profit divided by net interest, as per the discussion on the Help screen for the Comparative Financial Performance page of the GSR) is 2.39

4.42

21.1

3.45

None of these

According to explanations provided on the Help screens for the Production Cost Report, if a company pays a PAT member a $30,000 annual compensation package, utilizes no overtime, employs 200 PATs, spends $2,000 per quarter for training and productivity improvement for each PAT, incurs no severance expenses, and has annual PAT productivity of 12,000 cameras, then the company's in-house labor cost per camera assembled at regular time (no use of overtime) would be $10.00

$8.33

$10.17

$10.67

Cannot be determined from the information provided

According to the cost allocation methods used in the company's accounting system that are described in the Production Cost Report, if a company employs 100 PATs at a total labor cost of $12,000,000 (including wages, fringes, incentives, overtime, training, and severance expenses), assembles and ships 800,000 entry-level cameras and 200,000 multi-featured cameras over the course of a year, has revenues of $100 million from sales of entry level cameras, and revenues of $100 million from the sale of multi-featured cameras, then the total annual labor costs allocated to the assembly and shipment of entry-level cameras and the labor costs per entry-level camera assembled and shipped,...