Question 1

By knowing the return on assets for his bakery, Chuck will know

Accepted Answer

Return on assets is an important performance measure for a firm and its stockholders because it measures the profits that a firm makes relative to the assets it possesses.

Question 2

What does asset turnover measure?

Accepted Answer

Asset turnover is the retailer's net sales divided by its assets.

Question 3

A formula for calculating inventory turnover is: Cost of goods sold (COGS)/Average inventory at cost.

Accepted Answer

The formula for calculating inventory turnover is: Cost of goods sold (GOGS)/Average inventory at cost or Net sales (at Retail)/Average inventory (at retail).

Question 4

The strategic profit model decomposes ROA into two components

Accepted Answer

The strategic profit model decomposes ROA into two components: (1) operating profit margin percentage and (2) asset turnover.

Question 5

Which of the following statements does not describe asset turnover?

Accepted Answer

Asset turnover assesses the productivity of a retailer's investment in its assets and indicates how many dollars are generated for each dollar of assets.

Question 6

Which of the following is an integral part of the strategic profit model?

Accepted Answer

Asset turnover is the only component of these choices in the strategic profit model.

Question 7

Charging for space in stores is referred to as a slotting allowance.

Accepted Answer

Grocery stores often charge vendors for space in their stores, known as a slotting fee or slotting allowance.

Question 8

Same-store sales is the same as comparable-store sales growth.

Accepted Answer

Both same-store sales and comparable store sales growth compare sales growth in stores that have been open for at least one year.

Question 9

Calculate the return on assets for a gun shop that has total assets of $410,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and operating profit margin of $30,000.

Accepted Answer

Return on assets equals operating profit margin ($30,000) divided by total assets ($410,000) converted to a percentage.

Question 10

If you had $50,000 and you wanted to invest in stocks, you have two options. Which of the following ratios would best help you to decide on your investment?

Accepted Answer

Return on assets is an important performance measure for a firm and its stockholders because it measures the profits that a firm makes relative to the assets it possesses.

Question 11

Which of the following statements is not True about the strategic profit model?

Accepted Answer

In the strategic profit model, ROA is decomposed into operating profit margin percentage and asset turnover.

Question 12

Return on assets (ROA) is the profit generated by the assets possessed by the firm.

Accepted Answer

Return on assets (ROA) is the profit generated by the assets possessed by the firm.

Question 13

Cost of goods sold (COGS) includes what the retailer pays to suppliers for the merchandise the retailer sells.

Accepted Answer

What the retailer is invoiced for and pays to the supplier or vendor is part of the cost of goods sold (COGS).  Also included in COGS is any transportation cost that the retailer initially pays to get the merchandise to their distribution center from the supplier.

Question 14

Output measures assess the results of a retailer's investment decisions.

Accepted Answer

Output measures assess the results of a retailer's investment decisions.

Question 15

Gross margin is the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Accepted Answer

Net sales are the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Question 16

Self-gratification for the retailer is classified as a societal objective.

Accepted Answer

Self-gratification for the retailer is a personal objective.

Question 17

Jake, who runs a health food store, finds it is rewarding to interact with customers who like to eat organic and health food. Hence, he is recognized in the local community. Which objective of retailing does Jake emphasize by this practice?

Accepted Answer

Many retailers, particularly owners of small, independent businesses, have important personal objectives, including self-gratification, status, and respect.

Question 18

Top-down planning means that goals get set at the top of the organization and are passed down to the lower operating levels.

Accepted Answer

Top-down planning means that goals get set at the top of the organization and are passed down to the lower operating levels.

Question 19

The formula for calculating asset turnover is: Asset turnover = Cost of goods/Total assets.

Accepted Answer

The formula for calculating asset turnover is: Asset turnover = Net sales/Total assets.

Question 20

Operating profit margin is

Accepted Answer

Operating profit margin is the gross margin minus the operating expenses.

Quiz 6: Financial Strategy

By knowing the return on assets for his bakery, Chuck will know

What does asset turnover measure?

A formula for calculating inventory turnover is: Cost of goods sold (COGS)/Average inventory at cost.

The strategic profit model decomposes ROA into two components

Which of the following statements does not describe asset turnover?

Which of the following is an integral part of the strategic profit model?

Charging for space in stores is referred to as a slotting allowance.

Same-store sales is the same as comparable-store sales growth.

Calculate the return on assets for a gun shop that has total assets of $410,000, current assets of $74,000, total liabilities of $280,000, accounts receivable of $12,000, net sales of $64,000, and operating profit margin of $30,000.

If you had $50,000 and you wanted to invest in stocks, you have two options. Which of the following ratios would best help you to decide on your investment?

Which of the following statements is not True about the strategic profit model?

Return on assets (ROA) is the profit generated by the assets possessed by the firm.

Cost of goods sold (COGS) includes what the retailer pays to suppliers for the merchandise the retailer sells.

Output measures assess the results of a retailer's investment decisions.

Gross margin is the total revenues received by a retailer that are related to selling merchandise during a given time period minus returns, discounts, and credits for damaged merchandise.

Self-gratification for the retailer is classified as a societal objective.

Jake, who runs a health food store, finds it is rewarding to interact with customers who like to eat organic and health food. Hence, he is recognized in the local community. Which objective of retailing does Jake emphasize by this practice?

Top-down planning means that goals get set at the top of the organization and are passed down to the lower operating levels.

The formula for calculating asset turnover is: Asset turnover = Cost of goods/Total assets.

Operating profit margin is