MARKET AND RISK ANALYSIS Flashcards
Contribution ratio formula
Contribution margin / revenue
What approach does not segregate fixed and variable costs
Absorption
Selling,general & administrative expenses(SGA) are period costs under
Contribution Approach(Variable) Absorption Approach
Looking at Absorption Approach and Contribution Approach, which one is required by GAAP
Absorption Approach
A graph of a series of successive observations of a procedure taken at regular intervals of time is a(n)
Control Chart
A chart that indicates how frequently each particular defect occurs is a
Pareto diagram.
A just-in-time system is also known as a(n)
demand-pull system
The minimum annual acceptable rate of return on an investment is the
hurdle rate.
The net present value is expressed
in dollar
The net present value method captures
future growth.
If a responsibility center manager has influence over a cost, it is called
a controllable cost.
defined as the state in which output is produced 100% of the time
Theoretical capacity
performed by companies to determine the output quantity and other variables that should be used to maximize profits.
Cost-volume-profit analysis
should seek to eliminate bottlenecks in its production activities in order to maximize throughput.
Theory of constraints
firms from developed nations can generally effectively compete on the other three aspects listed: -
product and process quality, customer service, and technology.
Returns to scale only occur in
long run since a change in scale represents a change in fixed costs -
the following items would decrease the cash flow attributable to a potential investment project?
A higher tax rate
The security market line (SML) graphs the relationship between
Expected return and systematic risk (beta)
The equation for the SML is the
capital asset pricing model (CAPM).
The number of days between the time a firm acquires raw materials or inventory until it collects cash from the sale of its finished goods is called the
Operating cycle
an attempt should be made to segregate what three functions? -
Programming, operations and the data library
A provision in a bond contract that requires the issuer to retire a set percentage of the bond issue each year is referred to as a
Sinking fund
If interest rates rise, what will happen to the price of a bond and its yield to maturity (YTM)?
Price decreases and YTM increases
allow the customer to borrow from the bank if necessary, but do not guarantee payment to the supplier.
Lines of credit
include all of the policies and procedures used within a system to help ensure that all management directives are performed as anticipated
Control activities
Transfer pricing strategies is designed to
to maximize the profits of the company as a whole.
adjusts theoretical capacity for the expected output for the current year only
Expected annual capacity
What is meant by information and communication?
The identification, capture, and exchange of data in a format and time to allow proper tasks and responsibilities to be performed
A working capital technique, which delays the outflow of cash is
Draft
Investors are likely to view a high price earning P/E ratio as an indication that:
Earnings have growth potential
Transactions that would increase the current ratio and decrease net profit
Vacant land is sold for less than the NBV
The overall cost of capital is the
Rate of return on assets that covers the costs associated with the funds employed
If the NPV of a project is positive, it would indicate that
Rate of Return for this project is greater than the discount percentage rate used in the NPV computation
In equipment-replacement decisions, the decision making process is NOT affect by
Original FMV of the old equipment
Represent routine transactions that remain unpaid at the end of an accounting period as a result of transaction timing
Accrual
Accruals are another common form of
Short-term credit
The lower the carrying cost of inventory
the more inventory companies are willing to carry
Carrying Costs would include
- Storage Costs
- Insurance Cost
- Opportunity cost of inventory investment
- Lost inventory due to obsolescence or spoilage
