MAN 4752 CompXM Exam Questions And
Answers Graded A+
How do you increase your stock price? (3)
1. Increase EPS
2. Retire stock
3. Issue a dividend
How do you find EPS?
Net Profit / # shares outstanding
What is the prime rate?
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?
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)
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?
Differentiators
How do you find the amount of units a firm missed selling for a particular product? (2 steps)
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)
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)
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)
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)
1. Reliability
2. Position (performance and size)
3. Age
What are the aspects considered under a product's "place" factor?
Promotion budget
What are the aspects considered under a product's "promotion" factor?
Sales budget
Customer awareness deals with what?
What about customer accessibility?
Awareness: Promotion budget
Accessibility: Sales budget
For a product to be a worthy competitor it must have a survey score over what?
5
How can you tell how many different products are emerging next year?
No sales but have both capacity and automation
How do you find ROS?
Profit / Sales
What does ROS represent? (5)
What kind of strategy usually has a high ROS?
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?
1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6)
1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What is a low CM caused by?
How can you increase your CM?
CAUSED BY:
1. Price too low
2. Variable expenses too high (labor, material, inventory carry)
INCREASE BY:
1. Increase price
2. Increase automation (lower labor costs)
3. Lower MTBF and position (lower material costs)
4. Forecast better (lower inventory carrying costs)
How do you find the asset turnover rate?
What does it represent? (2)
Sales / Total assets
1. An efficiency measure
2. How hard we are working our assets to produce sales
What can cause a firm's low asset turnover? (4)
1. Too much cash
2. Too high A/R
3. Too high inventory
4. Too much (idle) capacity/automation
Answers Graded A+
How do you increase your stock price? (3)
1. Increase EPS
2. Retire stock
3. Issue a dividend
How do you find EPS?
Net Profit / # shares outstanding
What is the prime rate?
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?
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)
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?
Differentiators
How do you find the amount of units a firm missed selling for a particular product? (2 steps)
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)
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)
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)
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)
1. Reliability
2. Position (performance and size)
3. Age
What are the aspects considered under a product's "place" factor?
Promotion budget
What are the aspects considered under a product's "promotion" factor?
Sales budget
Customer awareness deals with what?
What about customer accessibility?
Awareness: Promotion budget
Accessibility: Sales budget
For a product to be a worthy competitor it must have a survey score over what?
5
How can you tell how many different products are emerging next year?
No sales but have both capacity and automation
How do you find ROS?
Profit / Sales
What does ROS represent? (5)
What kind of strategy usually has a high ROS?
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?
1. ROS
2. Asset turnover (above 1)
3. ROA
4. Leverage (1.8 - 2.8)
5. ROE
What can cause a low ROS? (6)
1. Price too low or expenses too high
2. Too much inventory
3. Too high depreciation
4. Too much idle capacity (increasing depreciation)
5. Too much cash
6. Low CM
What is a low CM caused by?
How can you increase your CM?
CAUSED BY:
1. Price too low
2. Variable expenses too high (labor, material, inventory carry)
INCREASE BY:
1. Increase price
2. Increase automation (lower labor costs)
3. Lower MTBF and position (lower material costs)
4. Forecast better (lower inventory carrying costs)
How do you find the asset turnover rate?
What does it represent? (2)
Sales / Total assets
1. An efficiency measure
2. How hard we are working our assets to produce sales
What can cause a firm's low asset turnover? (4)
1. Too much cash
2. Too high A/R
3. Too high inventory
4. Too much (idle) capacity/automation
