SCM 421 Midterm Exam | Complete Solutions (Verified)

SCM 421 Midterm Exam | Complete Solutions (Verified) You can't take a supplier's word for its physical fitness because . . .? a. Suppliers have no idea what an income statement or balance sheet is b. Suppliers don't compile financial information c. Suppliers tend to present overly optimistic data d. Suppliers may lack the capability to present financials accurately e. A and B f. C and D g. None of the above T/F Interest and taxes don't have anything to do with the quality of your operating decisions. True T/F Financial assessment should be treated equally for all suppliers. True Financial literacy means . . .? a. You understand assumptions and estimates of plant managers b. You can create a firm's financial statements c. You can make better decisions using financial numbers d. You can analyze and understand decisions made by other managers e. All of the above f. C and D only There is a "line" for which some costs fall above and others fall below. This "line" is an important determinant of . . .? a. COGS b. Operating expenses c. Bonuses d. Gross profit e. None of the above Cash comes from (and is used for) three types of activities. Which of the following does NOT represent one of those activities? a. Cash from Fundraising Activities b. Cash from Financing Activities c. Cash from Investment Activities d. Cash from Operating Activities 1. Given the following financial statements for GM, what are the total fixed assets? (Round your answer to the nearest dollar. Omit commas and the dollar sign—e.g., .) 2. Given the following financial statements for GM, the return on equity is ______ percent. (Write your answer as a percentage, rounding to the nearest hundredths place value—e.g., 5.25. Omit the percent sign in your answer.) 3. Given the following financial statements for GM, what is the A/P in days? (Round your answer to the nearest whole day.) 4.Given the following financial statements for GM, what is the A/R in days? (Round your answer to the nearest whole day.) 5. Given the following financial statements for GM, what is the inventory turnover ratio? (Round your answer to the nearest hundredths place value.) 6.Given the following financial statements for GM, what is the average days in inventory? (Round your answer to the nearest whole day.) 7. Given the following financial statements for GM, what is the "acid test"? (Round your answer to the nearest hundredths place value.) General Motors: Income Statement 12/31/14 Total Revenue 155,929,000 Cost of Revenue 142,121,000 Gross Profit 13,808,000 Operating Expenses Selling, General, and Administrative 12,158,000 Non-Recurring 120,000 Operating Income or Loss 1,530,000 Net Income 3,949,000 General Motors: Balance Sheet 12/31/14 Cash and Cash Equivalents 20,292,000 Short-Term Investments 9,222,000 Net Receivables 35,366,000 Inventory 13,642,000 Other Current Assets 5,148,000 Total Current Assets 83,670,000 Long-Term Investments 24,356,000 Property, Plant, and Equipment 34,803,000 Goodwill 1,427,000 Intangible Assets 4,983,000 Other Assets 3,024,000 Deferred Long-Term Asset Charges 25,414,000 Total Assets 177,677,000 Current Liabilities Accounts Payable 50,713,000 Short/Current Long-Term Debt 14,988,000 Total Current Liabilities 65,701,000 Long-Term Debt 31,853,000 Other Liabilities 44,099,000 Minority Interest 567,000 Total Liabilities 142,220,000 Stockholders' Equity Common Stock 16,000 Retained Earnings 14,577,000 Capital Surplus 28,937,000 Other Stockholder Equity -8,073,000 Total Stockholder Equity 35,457,000 1. Correct Answer: . Correct Answer: 11.14 3. Correct Answer: 130 4. Correct Answer: 83 5. Correct Answer: 10.42 6. Correct Answer: 35 7. Correct Answer: 0.49 T/F A company that is growing sales and increasing profits can go bankrupt. True The balance sheet helps you answer particular questions about your supplier. Which of the following is NOT one of those questions? a. What assumptions is the supplier making? b. Do total assets outweigh total liabilities? c. How much money is the supplier making? d. Can the supplier pay its bills? e. All of the above questions can be answered by looking at the balance sheet. An income statement . . .? a. Tries to measure and communicate whether your company can produce and deliver products and services profitably b. Is also known as a profit-and-loss statement c. Measures revenues for a specific time period d. Measures costs/expenses and profits/income for a specific time period e. All of the above f. None of the above T/F Operating profit tells you how well your company is being managed. True T/F Liabilities = Assets + Owners' Equity False Financial literacy means . . .? a. You understand assumptions and estimates of plant managers b. You can create a firm's financial statements c. You can make better decisions using financial numbers d. You can analyze and understand decisions made by other managers e. All of the above f. C and D only The Strategic Profit Model ends with what financial ratio? a. Net profit b. Inventory turns c. Return on assets (ROA) d. Asset turnover e. Times interest earned How might a purchasing manager influence his company's corporate social responsibility reputation? a. Negotiating with a supplier to lower the price of a purchased part b. Selecting an international supplier who pays high wages and treats employees well c. Making sure the supplier delivers to the factory on time d. Obtaining competitive intelligence and conveying this to company engineers e. Making sure to throw his water bottle in the recycle bin while visiting a supplier's facility T/F An extra dollar of sales revenue nearly always has a greater impact on profit than a dollar saved by purchasing. False Why is the most important purchasing right picking the right supplier? a. Customers will judge you for choosing poorly b. The right supplier will always have the lowest possible price c. The choice of supplier affects all the other rights d. The right supplier is the one with closest ties to your CEO e. The right supplier is the only one with whom it is possible to do business What is ROA if profit margin is 4% and asset turnover is 2.5? a. 3.0% b. 4.5% c. 6.5% d. 10.0% e. 12.0% Which of the following are true for a typical service company? a. Purchased inputs are about 80-95% of COGS b. Purchased inputs are about 60-80% of COGS c. Purchased inputs are about 30-40% of COGS d. Purchased inputs are about 20-30% of COGS e. Purchased inputs are about 10% of COGS On the asset portion of the strategic profit model, which of the following does purchasing generally affect? a. Inventory b. Accounts receivable c. Cash d. Sales revenue In looking at Figures 1-6 and 1-7, when purchasing reduces COGS, gross profit goes up. What else happens? a. Taxes go down b. Taxes go up c. S&A goes up d. Fixed assets go down e. Nothing else happens A purchasing professional's primary job is managing what? a. Upstream portion of your company's supply chain b. Downstream portion of your company's supply chain c. Whole supply chain from end-to-end d. Internal functions of your company e. Company customer interface A supplier sells your company a defective part. The part is put into your product, rendering it defective. What will most likely happen? a. Your customer will likely blame you for the defect, not the supplier b. Your customer will likely blame the supplier c. You aren't legally responsible for any problems the customer has with the product d. Your only additional costs will be giving the customer a good product and taking the old one back e. The customer can call a federal agency, get the supplier name, and deal with them directly Which of the following is true about a PO? a. "PO" and "requisition" mean the same thing b. It becomes a legal contract once accepted by the supplier c. Everyone is authorized to create a PO d. A supplier will refuse to accept a PO if it isn't signed by the buying firm's purchasing manager e. A PO has no legal significance, it is only used for auditing firm records T/F A factory buying a new computer for the accounting department is making a direct material purchase False Which of the following is true about the supplier selection process? a. Should be executed the exact same way for every buy b. Needs to be circumvented a lot - it's just too restricting to follow a formal process c. Should be tailored to the type of buy: routine buys should be kept simple, strategic buys should involve careful planning d. Is only relevant for large companies e. Is an out-of-date holdover from the pre-WWII "clerical" era of purchasing Why is a leverage item called a leverage item? a. This item is typically purchased through debt financing b. The supply market is incredibly complex c. Suppliers can basically force you to accept their terms d. Your purchasing power and multiple supplier options means you can demand (and get) the best deals from suppliers e. You spend very little money on it Which category is high-importance, and high market complexity? a. Critical b. Routine c. Leverage d. Bottleneck e. Exploitable Which certified supplier goods can bypass inspection and go straight to storage or an assembly line? a. Dock-to-stock supplier b. Direct delivery supplier c. Most Trusted Status (MTS) supplier d. Premium supplier e. Platinum supplier T/F A requisition communicates internal need, a PO is a request made to external suppliers True It is estimated that maverick spend is up to ___% of indirect spend a. 1% b. 2% c. 5% d. 10% e. 25% What is your biggest fear with a bottleneck item? a. The price will never change b. A supply disruption c. Too many potential suppliers d. Your customers will hate it e. The technology is too standardized The City of Dayton, Ohio uses what policy with regards to disadvantaged suppliers? a. The city bans all special preferences, no advantage is given to any firm. b. The city uses the same guidelines as the Federal government c. Local firms (within city limits) must be awarded 80% of all city contract dollars d. A local, diverse supplier can win a city contract if it is within 10% of the lowest bid e. Only suppliers classified as "disadvantaged" are permitted to win city contacts T/F Purchasing professionals need to ask tough questions and their homework in order to find the rights supplier. True T/F When a contract expires, you can afford to be complacent. Switching suppliers is usually fairly easy and inexpensive. False T/F In order to make a single sourcing strategy to work, you need to be able to work closely with the supplier to synchronize systems. True