CHAPTER 8
  • 1. Why are finance and accounting important in strategy implementation?
A) Strategies succeed only if finances are managed well
B) Strategies can be implemented without them
C) They are only needed for reporting
D) They reduce competition
  • 2. Finance and accounting activities are considered ______ to strategy implementation.
A) Central
B) Irrelevant
C) Optional
D) Secondary
  • 3. Financial knowledge gives strategists a:
A) Cultural advantage
B) Competitive advantage
C) Legal advantage
D) Political advantage
  • 4. Capital structure refers to the:
A) Amount of cash on hand
B) Level of profits
C) Market value of stock
D) Mix of debt and equity
  • 5. EPS/EBIT analysis is used to:
A) Evaluate competitors
B) Measure employee productivity
C) Forecast sales
D) Decide the best capital structure
  • 6. EPS stands for:
A) Earnings Per Stock
B) Estimated Profit Share
C) Earnings Per Share
D) Equity Per Share
  • 7. EBIT means:
A) Earnings Before Income Taxes
B) Earnings After Taxes
C) Equity Before Interest and Taxes
D) Earnings Before Interest and Taxes
  • 8. EAT refers to:
A) Earnings And Taxes
B) Earnings After Taxes
C) Earnings At Time
D) Equity After Taxes
  • 9. Which is the first step in EPS/EBIT analysis?
A) Compute EPS
B) Graph EPS and EBIT
C) Gather input data
D) Calculate taxes
  • 10. In EPS/EBIT analysis, EBIT is plotted on the:
A) Y-axis
B) Z-axis
C) X-axis
D) Horizontal bar
  • 11. In EPS/EBIT analysis, EPS is plotted on the:
A) Z-axis
B) Horizontal bar
C) X-axis
D) Y-axis
  • 12. The best financing option is the one that:
A) Has the lowest debt
B) Avoids taxes
C) Has the highest EPS for a given EBIT level
D) Uses only equity
  • 13. A limitation of EPS/EBIT analysis is that it does not consider:
A) Interest expense
B) Tax rates
C) Net income
D) Control and flexibility
  • 14. Projected financial statements usually cover how many years?
A) 4 years
B) 3 years
C) 2 years
D) 5 years
  • 15. Which financial statement is projected first?
A) Cash Flow Statement
B) Balance Sheet
C) Income Statement
D) Statement of Retained Earnings
  • 16. The percentage-of-sales method is mainly used to project:
A) Dividends only
B) Assets only
C) COGS and operating expenses
D) Taxes only
  • 17. Retained earnings are calculated as:
A) Sales − expenses
B) Net income + dividends
C) EBIT − taxes
D) Net income − dividends
  • 18. In projected balance sheets, cash is often used as a:
A) Liability
B) Fixed value
C) Plug figure
D) Dividend
  • 19. Why are notes added to projected financial statements?
A) To explain assumptions and major changes
B) To hide losses
C) To increase length
D) To calculate EPS
  • 20. Corporate valuation is needed for all EXCEPT:
A) Acquisitions
B) Mergers
C) Divestitures
D) Daily operations
  • 21. Which valuation method uses stockholders’ equity minus goodwill and intangibles?
A) P/E Ratio Method
B) Net Income Method
C) Net Worth Method
D) Outstanding Shares Method
  • 22. The Net Income Method values a firm as
A) Net income × 10
B) Net income × 5
C) Net income × stock price
D) Net income ÷ EPS
  • 23. Market capitalization is calculated using:
A) EPS × P/E ratio
B) Assets − liabilities
C) Number of shares × stock price
D) Net income × 5
  • 24. Financial ratio analysis is important because it:
A) Predicts stock prices
B) Replaces financial statements
C) Tracks performance and identifies strengths and weaknesses
D) Eliminates risk
  • 25. An Initial Public Offering (IPO) occurs when a company:
A) Issues bonds
B) Sells stock to the public for the first time
C) Declares dividends
D) Buys another firm
Created with That Quiz — a math test site for students of all grade levels.