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In times of depressed stock prices, stock issuances often prove to be the most suitable alternative for obtaining capital. f; medium; p. 275;

A) True
B) False

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Projected financial analysis is an important strategy-implementation technique because


A) it is an exact measurement of financial costs in the future.
B) it is an exact measurement of future company profits.
C) it allows an organization to examine the expected results of various actions and approaches.
D) insurance needs can be computed.
E) none of the above

F) B) and D)
G) A) and B)

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According to research, the most successful new product companies use a research and development strategy that ties internal strengths to external opportunities and is linked with corporate objectives.

A) True
B) False

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A recommended approach for determining a firm's worth is to base the analysis on the selling price of a similar company.

A) True
B) False

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Which of the following methods is not accepted for determining a business' worth?


A) What the firm owns.
B) What the firm earns.
C) What the firm's return on investment has been.
D) What the firm will bring in the market.
E) All of the above are accepted

F) B) and C)
G) B) and D)

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An EPS/EBIT chart can be constructed to determine the breakeven point, where one financing alternative becomes more attractive than another.

A) True
B) False

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A limitation of financial budgets is that they can hide inefficiencies if based solely on precedent rather than on periodic evaluation of circumstances and standards.

A) True
B) False

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Multidimensional scaling is used to determine


A) the size of a new building.
B) the size of a new department.
C) the amount of high-tech equipment a firm needs.
D) product positioning.
E) market segmentation

F) D) and E)
G) B) and C)

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Besides net profit from operations and the sale of assets, the two basic sources of funds for an ongoing enterprise are debt and equity.

A) True
B) False

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What is the most common type of financial budget?


A) cash
B) sales
C) profits
D) factory
E) flexible

F) C) and D)
G) B) and C)

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In low earning periods, too much debt in the capital structure of an organization can endanger stockholders' returns and jeopardize company survival.

A) True
B) False

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Market penetration can be defined as the subdividing of a market into distinct subsets of customers according to needs and buying habits.

A) True
B) False

Correct Answer

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The Financial Accounting Standard Board FASB) Rule 142 deals with


A) illegal inflation of financial projections.
B) hacking issues in MIS.
C) goodwill.
D) how firms conduct R & D.
E) improving marketing policies

F) D) and E)
G) All of the above

Correct Answer

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The percent-of-sales method should be used for computing the cost of goods sold and the expense items in projected income statements.

A) True
B) False

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Which of these is not a correct step in product positioning?


A) Select key criteria that effectively differentiate products or services in the industry.
B) Look for a hole or vacant niche
C) Plot major competitors' products or services in the resultant matrix.
D) Identify areas in the positioning map where the company's products or services could be most competitive in the given target market.
E) Develop a marketing plan to position the company's products and services appropriately

F) A) and E)
G) None of the above

Correct Answer

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A conservative rule of thumb for measuring the value of a firm is to establish a business' worth to be 10 times the firm's most current annual profit.

A) True
B) False

Correct Answer

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In general, the Internet makes market segmentation easier.

A) True
B) False

Correct Answer

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A financial budget is a document that details how funds will be obtained and spent for a specified period of time.

A) True
B) False

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Segmenting industrial markets is generally simpler and easier than segmenting consumer markets.

A) True
B) False

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Segmentation often reveals that large, random fluctuations in demand actually consist of several small, predictable, and manageable patterns.

A) True
B) False

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