Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
Name:
Class:
Date:
Appendix B
Indicate whether the statement is true or false.
1. Depreciation is an unusual expense because it does not involve an actual cash expense.
a.
True
b.
False
2. Subtracting depreciation and net interest expense from the firm’s operating profit reveals the firm’s taxable
income.
a.
True
b.
False
3. Receivables are collected credit sales.
a.
True
b.
False
4. A balance sheet contains more marketing-related information than an income statement.
a.
True
b.
False
5. Cost of goods sold represents the revenue a firm receives from goods sold to customers.
a.
True
b.
False
6. An income statement is a snapshot of what a company owns (called assets) and what it owes (called
liabilities) at a point in time.
a.
True
b.
False
7. The gross profit margin is the percentage of each sales dollar that a firm earns in profit after all expenses have
been paid.
a.
True
b.
False
8. All successful organizations have the same inventory turnover ratio.
a.
True
b.
False
9. While calculating the accounts receivable turnover ratio, sales to buyers using credit cards like MasterCard
and Visa are counted as credit sales because the seller is providing credit to the buyer who buys without cash.
a.
True
b.
False
10. The difference between assets and liabilities of a company is referred to as owner’s equity.
a.
True
b.
False
Name:
Class:
Date:
Appendix B
Indicate the answer choice that best completes the statement or answers the question.
11. Venus Inc., a software consulting firm, had made a gross profit of $350.0 million for the year 2012. For the
same year, it had made sales of $890.0 million. What was its gross profit margin?
a.
69.32%
b.
59.32%
c.
49.32%
d.
39.32%
12. Which of the following statements is true of markup?
a.
A marketer’s markup exerts no influence on its image as perceived by customers.
b.
Retailers who offer more services charge larger markups to cover their costs.
c.
Markups typically are stated as percentages of net interest expenses.
d.
Retailers with a lower turnover rate can make a profit by charging a smaller markup.
13. Which of the following profitability ratios measures the firm’s efficiency in generating sales and profits
from the total amount invested in the company?
a.
Inventory turnover
b.
Gross profit margin
c.
Return on assets
d.
Net interest expense
14. Calculate the markdown if a retailer decides to reduce the price of an item from $45 to $38 and sells 500
units.
a.
7%
b.
18.42%
c.
15.56%
d.
9%
15. Venus Inc., a software consulting firm, had depreciation of $20.8 million and a net interest expense of
$3.2 million for the past year. The firm’s operating profit for the same year was $319.0 million. What was the
firm’s taxable income for the past year?
a.
$400 million
b.
$299.2 million
c.
$295 million
d.
$316.8 million
16. In the context of financial statements, which of the following represents the systematic reduction over time
in the value of certain company assets?
a.
Depreciation
b.
Attrition
c.
Recession
Name:
Class:
Date:
Appendix B
d.
Deduction
17. What is a markup? What are the two marketing decisions that decide the amount of markup? Explain why a
markup is important to a marketer.
18. Explain the difference between an income statement and a balance sheet.
Name:
Class:
Date:
Appendix B
Answer Key
Name:
Class:
Date:
Appendix B
