Competitive Advantage, Firm Performance and Business Models

Name the frameworks which evaluates a company’s financial performance using metrics like revenue, profit margin, and ROI?

• Balanced Scorecard framework

• Economic Value Added (EVA) framework

• Financial performance framework

• None of the above

Which of the following ratios measures how efficiently a company can produce a good?

• Current ratio

• Quick ratio

• Debt-to-equity ratio

• Cost of goods sold (COGS) / Revenue

Which of the following ratios measures how much working capital a firm has tied up in its operations?

• Gross margin

• Debt-to-equity ratio

• Asset turnover ratio

• Working capital / Revenue

Which of the following ratios measures how much a firm earns in revenues is tied up with intangible assets?

• Debt-to-equity ratio

• Intangibles / Revenue

• Current ratio  

• None of the above

Which of the following statements is FALSE?

• Stock valuation is volatile due to market volatility, external factors and investor sentiment.

• Psychological mood can overshoot or undershoot expectations of investors that influence stock prices.

• Accounting data only captures tangible assets.

• Accounting data is historical in nature and cannot guarantee future performance.

What is the formula for calculating the Total Return to Shareholders?

• Dividends + capital gains

• Earnings per share + dividends

• Stock price appreciation + dividends

• Net income + dividends

What is the formula for calculating Market Capitalization?

• Total revenue / number of outstanding shares

• Price-to-earnings ratio x number of outstanding shares

• Number of outstanding shares / share price

• Number of outstanding shares x share price

Only firms offering superior products/services can create greater economic value than competitors.

• True

• False

Which of the following is a characteristic of the Balanced Scorecard?

• It only focuses on financial goals.

• It only uses internal performance metrics.

• It helps managers achieve their strategic objectives.

• It is primarily used to measure customer satisfaction.

Which of the following is a disadvantage of the Balanced Scorecard?

• It does not provide guidance on how to get back on track if deviations occur.

• It focuses too much on financial measures.

• It is not useful for measuring the success of strategy implementation.

• None of the above