Question 1

Organizations that have clearly specified and distinct products and services and considerable competition typically use ________ control.
A)market
B)environmental
C)economic
D)clan
E)bureaucratic

Accepted Answer

Market control is commonly used in organizations with clear products and services and considerable competition as it involves monitoring and responding to the activities and strategies of competitors in the market. This helps the organization adjust and improve its own products and services to stay competitive. Environmental control involves monitoring and responding to external factors outside the market, economic control focuses on financial and cost-related factors, clan control relies on shared values and beliefs within the organization, and bureaucratic control emphasizes adherence to rules and procedures.

Question 2

Budgets provide managers with quantitative standards against which to measure and compare resource consumption.By pointing out deviations between standard and actual consumption,they become ________.
A)leading indicators
B)environmental concerns
C)bureaucratic measuring sticks
D)clan controls
E)control tools

Accepted Answer

Budgets are control tools as they help managers to monitor and regulate the consumption of resources. They provide a framework for evaluating performance by comparing actual consumption with the set standards. Deviations between standard and actual consumption help managers to identify areas where corrective action needs to be taken.

Question 3

Which of the following financial control measures adds a market dimension because it measures the stock market's estimate of the value of a firm's past and expected capital investment projects?
A)economic value added
B)market value added
C)principle value added
D)real value added
E)return on investment

Accepted Answer

Market value added measures the stock market's estimate of the value of a firm's past and expected capital investment projects, and adds a market dimension to the financial control measures. Economic value added and return on investment are also financial control measures but do not include a market dimension like market value added does. Principle value added and real value added are not commonly used financial control measures.

Question 4

Beta Corporation has turned each of its divisions into profit centres and evaluates each division by the percentage of total corporate profits that it generates.Beta uses ________ control.
A)market
B)environmental
C)bureaucratic
D)clan
E)economic

Accepted Answer

Beta Corporation uses market control as it evaluates each division by the percentage of total corporate profits that it generates.

Question 5

________ ratios measure an organization's ability to meet its current debt obligations.
A)Liquidity
B)Leverage
C)Conformance
D)Activity
E)Profitability

Accepted Answer

Liquidity ratios measure an organization's ability to meet its current debt obligations. These ratios focus on the organization's current assets and current liabilities. Examples of liquidity ratios include current ratio and quick ratio.

Question 6

If the company's market value is greater than all the capital invested in it,the company has a positive ________,indicating that managers have created wealth.
A)market value added
B)principle value added
C)economic value added
D)real value added
E)return on investment

Accepted Answer

Market Value Added (MVA) is the difference between the market value of a company and the capital contributed by investors. A positive MVA indicates that the company has created wealth for its shareholders.

Question 7

Studies have shown that ________ is a predictor of ________.
A)principle value added; economic value added
B)economic value added; real value added
C)economic value added; market value added
D)market value added; principle value added
E)real value added; return on investment

Accepted Answer

Economic value added (EVA) is a financial measure that calculates the value a company generates in excess of the cost of capital. Market value added (MVA) is a measure of a company's value through the eyes of the market. Studies have shown that EVA is a predictor of MVA, meaning that companies that generate higher economic value added are likely to have higher market value added.

Question 8

________ ratios examine the organization's use of debt to finance its assets,and considers whether it's able to meet the interest payments on its debt.
A)Liquidity
B)Leverage
C)Conformance
D)Activity
E)Profitability

Accepted Answer

Leverage ratios examine how much a company relies on debt financing and whether it can sustain the interest payments on that debt. Common leverage ratios include debt-to-equity ratio, interest coverage ratio, and debt-to-assets ratio.

Question 9

Global Tech Limited uses cross-functional teams to resolve organizational problems and to keep up with rapidly changing technology.They use ________ control.
A)market
B)environmental
C)bureaucratic
D)clan
E)matrix

Accepted Answer

Clan control involves using shared values, beliefs, and traditions to guide behavior and decision-making, which aligns with the use of cross-functional teams to address issues collaboratively.

Question 10

When the Canadian Curling Association (CCA)established a long-term financial reserve,which financial ratio was likely most important to the CCA?
A)liquidity
B)leverage
C)conformance
D)activity
E)profitability

Accepted Answer

The answer of When the Canadian Curling Association (CCA)established a...

Question 11

Acid test is an example of a(n)________ ratio.
A)liquidity
B)leverage
C)conformance
D)activity
E)profitability

Accepted Answer

Acid test ratio is a liquidity ratio which measures a company's ability to pay its short-term liabilities using its most liquid assets. It is also known as the quick ratio or the liquid ratio.

Question 12

________ control is an approach that emphasizes authority and relies heavily on administrative rules,policies,and procedures.
A)Market
B)Environmental
C)Economic
D)Clan
E)Bureaucratic

Accepted Answer

The approach that emphasizes authority and relies heavily on administrative rules, policies, and procedures is known as bureaucratic control. This approach emphasizes the importance of following established procedures and adhering to strict guidelines to ensure conformity and consistency in achieving organizational goals. Bureaucratic control is often used in large organizations with complex structures and formalized processes.

Question 13

________ control is often used in organizations in which teams are common and technology is changing rapidly.
A)Market
B)Environmental
C)Economic
D)Clan
E)Bureaucratic

Accepted Answer

Clan control is often used in organizations where teams are common and technology is changing rapidly. This type of control relies on shared values, beliefs, and culture within the organization to create a sense of cohesion and common purpose among team members. It is less formal and allows for greater flexibility and innovation compared to other forms of control like bureaucratic or economic control.

Question 14

Inventory turnover is an example of a(n)________ ratio.
A)liquidity
B)leverage
C)conformance
D)activity
E)profitability

Accepted Answer

Inventory turnover measures how quickly a company is able to sell its inventory and replace it with new units. This is an activity ratio because it measures how active a company is in selling its products.

Question 15

________ ratios assess how efficiently and effectively the firm is using its assets to generate profits.
A)Liquidity
B)Leverage
C)Conformance
D)Activity
E)Profitability

Accepted Answer

The answer of ________ ratios assess how efficiently and effectively...

Question 16

In the mid 2000s,when the Canadian Curling Association (CCA)was facing a seven-figure deficit,which financial ratio was likely most important to the CCA?
A)current ratio
B)times interest earned
C)total asset turnover
D)return on investment
E)economic value added

Accepted Answer

The current ratio is important for assessing an organization's ability to pay off its short-term liabilities with its short-term assets, which is crucial when facing a financial deficit.

Question 17

Although Husky Energy gives its managers some freedom to run their departments as they see fit,they must stay within their budgets and follow corporate guidelines.Husky uses ________ control.
A)market
B)environmental
C)bureaucratic
D)clan
E)democratic

Accepted Answer

Husky Energy uses a bureaucratic control system where managers are expected to follow corporate guidelines and stay within their budget constraints. This system ensures standardization and efficiency across departments, and allows for centralized decision-making.

Question 18

Which of the following financial control measures is calculated by taking after-tax operating profit minus the total annual cost of capital?
A)market value added
B)principle value added
C)economic value added
D)total asset turnover
E)times interest earned

Accepted Answer

Economic value added (EVA) is a financial control measure that is calculated by taking after-tax operating profit and subtracting the total annual cost of capital. EVA measures the amount of value created by a company in a given period, and it is considered a more accurate measure of a company's profitability than traditional measures such as net income or earnings per share. The other options listed (market value added, principle value added, total asset turnover, and times interest earned) do not involve the calculation of after-tax operating profit minus the total annual cost of capital.

Question 19

The business faculty complained that the college print shop was charging too much for materials.A local print shop could do the same work for about half the price.Apparently,the college print shop did NOT use ________ control.
A)market
B)environmental
C)bureaucratic
D)clan
E)democratic

Accepted Answer

Market control refers to the use of competitive market forces to regulate and control organizational activities. In this case, the college print shop did not take into account the competitive pricing of the local print shop and therefore did not use market control.

Question 20

In the ________ approach to control,employee behaviours are regulated by shared values,norms,traditions,rituals,and other aspects of the organization's culture.
A)market
B)environmental
C)economic
D)clan
E)bureaucratic

Accepted Answer

The clan approach to control emphasizes the importance of creating a strong organizational culture that guides employee behavior through shared values, norms, traditions, and rituals. This approach is characterized by a family-like atmosphere in which employees feel a sense of loyalty and commitment to the organization and its goals. In contrast to the market, environmental, and economic approaches, which rely on external factors to guide behavior, the clan approach emphasizes the internal dynamics of the organization. The bureaucratic approach, on the other hand, relies on strict rules and procedures to regulate behavior, which is different from the more flexible and informal approach of the clan model.

Quiz 11: Foundations of Control

Organizations that have clearly specified and distinct products and services and considerable competition typically use ________ control.

Budgets provide managers with quantitative standards against which to measure and compare resource consumption.By pointing out deviations between standard and actual consumption,they become ________.

Which of the following financial control measures adds a market dimension because it measures the stock market's estimate of the value of a firm's past and expected capital investment projects?

Beta Corporation has turned each of its divisions into profit centres and evaluates each division by the percentage of total corporate profits that it generates.Beta uses ________ control.

________ ratios measure an organization's ability to meet its current debt obligations.

If the company's market value is greater than all the capital invested in it,the company has a positive ________,indicating that managers have created wealth.

Studies have shown that is a predictor of .

________ ratios examine the organization's use of debt to finance its assets,and considers whether it's able to meet the interest payments on its debt.

Global Tech Limited uses cross-functional teams to resolve organizational problems and to keep up with rapidly changing technology.They use ________ control.

When the Canadian Curling Association (CCA) established a long-term financial reserve,which financial ratio was likely most important to the CCA?

Acid test is an example of a(n) ________ ratio.

________ control is an approach that emphasizes authority and relies heavily on administrative rules,policies,and procedures.

________ control is often used in organizations in which teams are common and technology is changing rapidly.

Inventory turnover is an example of a(n) ________ ratio.

________ ratios assess how efficiently and effectively the firm is using its assets to generate profits.

In the mid 2000s,when the Canadian Curling Association (CCA) was facing a seven-figure deficit,which financial ratio was likely most important to the CCA?

Although Husky Energy gives its managers some freedom to run their departments as they see fit,they must stay within their budgets and follow corporate guidelines.Husky uses ________ control.

Which of the following financial control measures is calculated by taking after-tax operating profit minus the total annual cost of capital?

The business faculty complained that the college print shop was charging too much for materials.A local print shop could do the same work for about half the price.Apparently,the college print shop did NOT use ________ control.

In the ________ approach to control,employee behaviours are regulated by shared values,norms,traditions,rituals,and other aspects of the organization's culture.