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ZZZ - BEC #1 > Day 43 > Flashcards

Day 43 Flashcards

1
Q

Equation: Residual Income

A

= NI - Required Return

Required Return = Equity × Hurdle Rate

MCQ-03439

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2
Q

The Imputed Interest Rate used in the Residual Income approach for performance measurement and evaluation is characterized as the:

A

The historical weighted average cost of capital for a company

Usually used as the target or Hurdle Rate in the Residual Income approach

MCQ-03452

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3
Q

MCQ-05263 balanced scorecard

A
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4
Q

What does not measure operational efficiency?

A

Residual Income

MCQ-04244

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5
Q

Equation: cash conversation cycle

A

= days in inventory + days sales in AR - days of payables outstanding

MCQ-07782

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6
Q

Name one explanation why Economic Value Added may be higher than RI?

A

Cost of Capital is less than the hurdle rate

EVA = NOPAT - Required Return

Required Return = Investment × WACC

MCQ-07780

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7
Q

Equation: APR of quick PMT discount

A

= 365 / (Pay Period - Discount Period)
×
Discount% / (100% - Discount%)

MCQ-07798

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8
Q

Name an example of aggressive working Capital MGMT?

A

Uses AP to finance inventory purchases

When CA are financed with CL instead of a long-term payable

Note: Using a long-term payable (2-year Note) to finance Marketable Securities (Current Asset) = Conservative working Capital mgmt

MCQ-07784

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9
Q

Equation: Reorder Point

A

= Safety Stock + (Lead Time × Sales During Lead Time)

MCQ-07795

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10
Q

MCQ-04345 operating profit Margin = EBIT

A
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11
Q

The Imputed Interest rate used in the Residual Income approach can be described as:

A

The target return on investments set by company’s MGMT

MCQ-04247

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12
Q

Platinum Co. Has a receivable sure in 30 days for 30,000 euros. The treasurer is concerned that the value of the euro will drop relative to the dollar before PMT is received. What should Platinum do?

A

Enter into a forwards contact to sell 30,000 euros in 30 days

Platinum is going to receive euros in 30 days and will want to lock in the price now

MCQ-05767

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13
Q

MCQ-04193

A
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14
Q

Equation: Profit Margin

A

ROA = Profit Margin × Asset Turnover

Profit Margin = ROA / Asset Turnover

MCQ-1115

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15
Q

Define: Strategic Planning

A

It establishes the general direction of the organization

Strategic Planning is the creation of the overall strategic plan for an organization to achieve its overall “business objectives”

MCQ-05592

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ZZZ - BEC #1 (75 decks)

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