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61.Why is return on investment (ROI) the most commonly used financial performance measure? 

A. It measures how far profits can decline before managers cannot meet interest changes.

B. It measures how efficiently managers are collecting revenues from customers to pay expenses.

C. It shows whether organizations can pay claims of short-term creditors without selling inventory.

D. It measures how efficiently managers are turning inventory over.

E. It allows managers of one organization to compare performance with that of other organizations.

62.Which of the following financial measures is a result of dividing a company's operating profit by its sales revenues? 

A. Gross profit margin

B. Return on investment

C. Net profit

D. Operating margin

E. Operating costs

63.Which of the following can be inferred from calculating a company's operating margin? 

A. An organization’s competitive advantage

B. How efficiently an organization is using its resources

C. Whether the organization has the resources available to meet the claims of short-term creditors

D. How efficiently managers are turning inventory over

E. How efficiently managers are collecting revenue from customers

64.Which of the following financial ratios measures the ability of the organization to pay its short-term debts? 

A. Leverage ratios

B. Liquidity ratios

C. Activity ratios

D. Profit ratios

E. Inventory turnover ratios

65.Which type of financial ratio is computed by dividing the organization's present assets by its present liabilities? 

A. Inventory turnover ratio

B. Days sales outstanding ratio

C. Profit ratio

D. Current ratio

E. Debt-to-assets ratio

66._____ shows whether an organization can pay claims of short-term creditors without selling inventory. 

A. Quick ratio

B. Current ratio

C. Days sales outstanding ratio

D. Inventory turnover ratio

E. Profit ratio

67.The times-covered ratio, which measures the degree to which managers use debt or equity to finance ongoing operations, is a type of _____. 

A. current ratio

B. liquidity ratio

C. leverage ratio

D. activity ratio

E. profit ratio

68.Which type of financial ratio measures how well the managers of an organization are creating value from the organization's assets? 

A. Leverage ratios

B. Liquidity ratios

C. Profit ratios

D. Current ratios

E. Activity ratios

69.Which of the following describes stretch goals? 

A. Goals at one level that are not in sync with goals set at other levels of the organization

B. Goals that subordinates set for themselves

C. Goals that are specific and difficult but not out of reach

D. Goals that are set low and are easy to achieve    

E. Goals set at an impossibly high level

70.What is an operating budget? 

A. A measure of how much percentage profit a company is earning on sales

B. The result of dividing a company’s operating profit by sales revenues

C. The amount an organization has left after all the costs of making the product and running the business have been deducted

D. Specification of the functional goals that the managers of different functions need to achieve

E. A blueprint that states how managers intend to use organizational resources to achieve organizational goals efficiently

 

 

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