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Finance
Q:
Assuming the company neither sold nor salvaged any assets during the year, what were the company's capital expenditures during 2011?A. 482B. 78C. 421D. 61E. 139F. None of the above.
Q:
During 2011, what was the cost of goods (in $ millions) produced by the company?A. 223B. 194C. 252D. 228E. 218F. None of the above.
Q:
Selected information about South, Inc., a restaurant chain, follows.During 2011, how much cash (in $ millions) did South collect from sales?A. 364B. 277C. 404D. 324E. 451F. None of the above.
Q:
Depreciation expense:
A. reduces both taxes and net income.
B. increases the net fixed assets as shown on the balance sheet.
C. reduces both the net fixed assets and the costs of a firm.
D. is a noncash item that increases net income.
E. decreases current assets, net income, and operating cash flows.
Q:
The book value of a firm is:
A. equivalent to the firm's market value provided that the firm has some fixed assets.
B. based on historical cost.
C. generally greater than the market value when fixed assets are included.
D. more of a financial than an accounting valuation.
E. adjusted to the market value whenever the market value exceeds the stated book value.
Q:
Which of the following tends to cause differences between market values and book values?
I. Accounting often creates a dichotomy between realized and unrealized income.
II. Accountants allocate goodwill when a firm is acquired for more than book value.
III. Many accounting values are transactions-based and hence backward-looking.
IV. The use of fair-value accounting.
V. Accountants refuse to assign a cost to equity capital.
A. I and II only
B. I and III only
C. II and IV only
D. I, III, and IV only
E. I, III, and V only
F. I, III, IV, and V only
Q:
Noncash items refer to:
A. sales which are made on a credit basis.
B. inventory items purchased using credit.
C. intangible assets such as patents.
D. expenses, like depreciation, which do not directly affect cash flows.
E. administrative expenses.
Q:
Which one of the following is a source of cash?
A. decrease in accounts receivable
B. decrease in common stock
C. decrease in long-term debt
D. decrease in accounts payable
E. increase in inventory
Q:
Which one of the following is a use of cash?
A. increase in notes payable
B. increase in inventory
C. increase in long-term debt
D. decrease in accounts receivable
E. increase in common stock
Q:
Which one of the following is a source of cash?
A. increase in accounts receivable
B. decrease in notes payable
C. decrease in common stock
D. increase in inventory
E. increase in accounts payable
Q:
The sources and uses of cash over a stated period of time are reflected on the:
A. income statement.
B. balance sheet.
C. shareholders' equity statement.
D. cash flow statement.
E. statement of operating position.
Q:
Which one of the following is the financial statement that summarizes changes in the company's cash balance over a period of time?
A. income statement
B. balance sheet
C. cash flow statement
D. shareholders' equity statement
E. market value statement
Q:
Which one of the following is the financial statement that summarizes a firm's revenue and expenses over a period of time?
A. income statement
B. balance sheet
C. cash flow statement
D. sources and uses statement
E. market value statement
Q:
Which one of the following is the financial statement that shows a financial snapshot, taken at a point in time, of all the assets the company owns and all the claims against those assets?
A. income statement
B. creditor's statement
C. balance sheet
D. cash flow statement
E. sources and uses statement
Q:
Which of the following statements concerning a firm's cash flows and profits is false?
A. Managers must be at least as concerned with cash flows as with profits.
B. A company that sells merchandise at a profit will generate cash soon enough to replenish cash flows required for continued production.
C. The cash flows generated in a given time period can differ from the profits reported.
D. Profits are no assurance that cash flow will be sufficient to maintain solvency.
E. Due to required cash investments in current assets, fast-growing and profitable companies can literally "grow broke".
Q:
Which of the following statements concerning the cash flow production cycle is true?
A. The profits reported in a given time period equal the cash flows generated.
B. A company's operations and finances are independent of each other.
C. Financial statements have nothing to do with reality.
D. The movement of cash to inventory, to accounts receivable, and back to cash is known as the firm's working capital cycle.
E. A profitable company will always have sufficient cash to meet its obligations.
Q:
A company is deciding between 2 countries to locate its call center.
A: Which country is preferred by an un-weighted method if high scores indicate low risk.
B: Suppose a consultant recommended that Factor 2 have its weight doubled while Factor 3 should have its weight quadrupled. Which country is best now using a weighted method? Country
Factor 1
Factor 2
Factor 3 A
10
7
4 B
5
8
6
Q:
Two firms that are being considered for an outsourced job have equal un-weighted factor method
scores. Suppose that the ratings for each firm are identical except in two categories, currency and cost risk with high numbers representing low risk. The weight factor for currency risk is three times that of cost risk. Firm 1's score for currency is a 2 and Firm 2's score for cost is a 5. If firm 1 and 2 have identical cumulative scores with the weighted method, find Firm 1's cost score and Firm 2's currency score.
Q:
A firm is considering two countries to outsource its call center. Currently the weighted factor method has given a score of 120 to the first country and 110 to the second country. If the
second country wants to improve its score in the labor rating (weight=1.5), how much must it increases its labor rating by to have a score greater than or equal to country 1?
Q:
Which country should a firm choose for production using a weighted factor method if high scores indicate high risk? Country
Labor (W=5)
Currency (W=3)
Quality (W=7)
Logistics (W=2) Canada
10
9
6
4 Singapore
7
7
5
9 Mexico
8
5
7
9
Q:
Which country should the firm choose for production using an unweighted factor method if high scores indicate low risk? Country
Labor
Currency
Quality Canada
7
7
10 America
9
8
6 Mexico
5
10
9 China
3
6
8
Q:
A firm is evaluating country risk as a first step in its outsourcing provider selection process. Legal issues, currency risk, political risk, and cultural compatibility have been assigned weights of 30%, 10%, 20%, and 40%, respectively. Three countries were scored on each of those risk factors (see table below) using a scale of 1-10, with a score of 1 meaning high risk and 10 meaning minor risk. Using the factor-rating method, which country appears to have the least risk overall? Country A
Country B
Country C Legal issues
2
6
10 Currency risk
8
4
2 Political risk
5
8
2 Cultural compatibility
3
1
2
Q:
Identify some ethical principles as applied to outsourcing.
Q:
What permits CEOs, who prefer short-term planning and are interested only in bottom-line improvements, to use the outsourcing strategy to make quick gains at the expense of longer-term objectives?
Q:
Identify five main advantages of outsourcing.
Q:
Identify several outsourcing processes, that is, activities that firms should undertake when embarking on outsourcing.
Q:
Identify several risks in outsourcing.
Q:
Has there been any political backlash in the United States resulting from outsourcing in foreign countries? Explain.
Q:
What do you think would be a major risk for a government trying to promote its country as a low-cost producer, filled with ready and willing outsourcing providers?
Q:
Identify some business processes that are outsourced.
Q:
Identify three factors fueling the continuing growth of outsourcing.
Q:
Describe the difference between outsourcing and offshoring.
Q:
In the electronics industry, the __________ sets environmental standards, bans child labor and excessive overtime, and audits outsourcing producers to ensure compliance.
Q:
Whatever the outsourced product or service, agreements must specify ongoing __________ and expected __________.
Q:
__________ is the number-one reason driving outsourcing for many firms.
Q:
__________ is the practice of choosing an external provider in the home country or in a nearby country.
Q:
The factor-rating method is an excellent tool for dealing with both __________ and __________ problems.
Q:
The term __________ has been created to describe the return of business activity to the original firm.
Q:
The theory of __________ states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.
Q:
An organization's unique skills, talents, and capabilities are referred to as its __________.
Q:
Outsourcing is an extension of the long-standing practice of __________ production activities.
Q:
Offshoring is the practice of moving a business process to a foreign country __________ control of it.
Q:
Outsourcing manufacturing is also known as __________.
Q:
Offshoring is the practice of moving a business process to a foreign country but retaining __________.
Q:
__________ is the practice of moving a business process to a foreign country but retaining control of it.
Q:
__________ is the practice of procuring from external sources services or products that are normally part of an organization.
Q:
Which of the following is a key issue coupled between ethics and outsourcing?
A) moving pollution from one country to another
B) ignoring religious customs and holidays
C) low wages that are the result of labor abuse
D) short-term arrangements instead of long-term deals
E) All of the above are key tenets of ethics in outsourcing
Q:
Which of the following metrics is most likely used in evaluating an outsourced call center but not a manufacturing process?
A) quality
B) delivery
C) logistics
D) cost
E) personnel evaluations and training
Q:
Which of the following statements is most accurate?
A) outsourcing is shrinking; international trade is shrinking
B) outsourcing is shrinking; international trade is growing
C) outsourcing is growing; international trade is shrinking
D) outsourcing is growing; international trade is growing
E) outsourcing is holding steady, but international trade always shrinks when outsourcing grows
Q:
Advantages of outsourcing do not include
A) cost savings
B) outside expertise
C) renewed focus on core competencies
D) gaining outside technologies
E) creating future competition
Q:
Which of the following is the number-one reason driving outsourcing for many firms?
A) cost savings
B) gaining outside expertise
C) improving operations and service
D) focusing on core competencies
E) gaining outside technology
Q:
Which of the following is not an advantage of outsourcing?
A) cost savings
B) gaining outside expertise
C) improving operations and service
D) outsourcing core competencies
E) gaining outside technology
Q:
Nearsourcing helps compromise a company's desire for __________ while still providing some __________.
A) control, cost savings
B) quality, control
C) control, quality
D) quality, cost savings
E) political stability, quality
Q:
A manufacturing plant is considering outsourcing its production of tires. There are 5 risk areas in which the decision will be based. The current plant had scores of 1, 2, 4, 8, 2 while the outsourced plant had scores of 3, 2, 4, 2, 5. What is the current plant's score if high scores indicate low risk and an unweighted factor method is applied?
A) 14
B) 15
C) 16
D) 17
E) none of the above
Q:
The practice of choosing an external provider in the home country or in a nearby country is referred to as
A) homeshoring
B) homesourcing
C) nearshoring
D) nearsourcing
E) backsourcing
Q:
The reason behind most outsourcing failures is
A) decision was rushed
B) lack of understanding and analysis before decision
C) costs were higher than predicted
D) labor was less productive than predicted
E) unable to handle increased logistic complexity
Q:
Which of the following are possible outsourcing risks?
I. Incorrectly identifying a core competency as non-core
II. Setting savings goals too high
III. Inability to control product development, quality
IV. Non-responsive provider
V. Currency fluctuations
A) I, II, IV
B) II, III, V
C) I, III, V
D) III, IV, V
E) I, II, III, IV, V
Q:
A company that had previously sent its call center business to India has now brought that business back to small towns in the U.S. such as Dubuque, Iowa. This is an example of
A) return outsourcing
B) inshoring
C) offshoring
D) outsourcing
E) backsourcing
Q:
The decline in customer satisfaction for outsourced call centers highlights which aspect of outsourcing risk?
A) cost
B) quality
C) core competency
D) erratic utility functionality
E) technological
Q:
According to research, which of the following is the most common reason cited for outsourcing failure?
A) core competencies identified as non-core
B) erratic power grids in foreign countries
C) unable to control product development, schedules, and quality
D) decisions made without sufficient understanding of the options through analysis
E) political and exchange rate uncertainty
Q:
Which of the following statements is most accurate?
A) Nearly all outsourcing relationships do not last beyond two years.
B) Nearly all U.S. firms that outsourced processes to India have backsourced them.
C) Approximately half of all outsourcing agreements fail.
D) Outsourcing is a relatively risk-free activity.
E) More than 90% of outsourcing agreements succeed.
Q:
What term has been created to describe the return of business activity to the purchasing firm?
A) renewal
B) backsourcing
C) reversal
D) reversesourcing
E) insourcing
Q:
What theory states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can?
A) theory of competitive advantage
B) theory of core competencies
C) theory of comparative advantage
D) theory of outsourcing
E) theory of offshoring
Q:
Which of the following is not true regarding core competencies?
A) They may include specialized knowledge.
B) They may represent a small portion of an organization's business activities.
C) They may include proprietary technology or information.
D) They may be good candidates for outsourcing.
E) They may include unique production methods.
Q:
Outsourcing manufacturing is also known as
A) license manufacturing
B) sublease manufacturing
C) concurrent manufacturing
D) hollow manufacturing
E) contract manufacturing
Q:
Outsourcing is simply an extension of the long-standing practice of
A) subcontracting
B) importing
C) exporting
D) postponement
E) e-procurement
Q:
What is the practice of moving a business process to a foreign country but retaining control of it?
A) exporting
B) farshoring
C) offshoring
D) outsourcing
E) backsourcing
Q:
What is the practice of procuring from external sources services or products that are normally part of an organization?
A) nearshoring
B) farshoring
C) offshoring
D) outsourcing
E) backsourcing
Q:
The number-one reason driving outsourcing for many firms is to focus on core competencies.
Q:
Nearshoring is the practice of choosing an outsource provider in the home country or in a nearby country.
Q:
A purchasing firm should not include its home country when conducting a country risk assessment.
Q:
The factor-rating method is an excellent tool for dealing with both country risk assessment and source provider selection problems.
Q:
Research indicates that of all the reasons given for outsourcing failure, the most common is that the decision was made without sufficient understanding of the options through analysis.
Q:
The term renewal has been created to describe the return of business activity to the purchasing firm.
Q:
Research data suggest that foreigners outsource far fewer services to the U.S. than American companies send abroad.
Q:
Research data suggest that foreigners outsource far more services to the U.S. than American companies send abroad.
Q:
The theory of comparative advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.
Q:
The theory of competitive advantage states that you should allow another firm to perform work activities for your company if that company can do it more productively than you can.
Q:
Core competencies are good candidates for outsourcing.
Q:
An organization's unique skills, talents, and capabilities are referred to as its core competencies.