Exam 20: Financial Analysis In Marketing

Radiance Solar Panels, which sells solar systems to the construction industry, sells all of its products on credit, and requires its customers to pay within 30 days. Last year, the company's credit sales totaled about $800,000 and its average accounts receivable was close to $80,000. Which statement is true about the company's accounts receivable turnover?

All successful organizations have the same inventory turnover ratio.

Depreciation is an unusual expense because it does not involve an actual cash expense.

While calculating the accounts receivable turnover ratio, sales to buyers using credit cards such as MasterCard and Visa are counted as credit sales because the seller is providing credit to the buyer who buys without cash.

Twelve months ago, Genevieve's cupcake business had a net income of $36,250 and sales of $145,000. Now that this current year is coming to an end, she's determined that her business had a net income of $33,600 and sales of $168,000 over the last twelve months. What does Genevieve's net profit margin reveal about her business?

The operations manager at a lumber supply company is analyzing how well his company is using its resources. He knows that sales for the past year were $3.5 million. He also knows that he had $850,000 in inventory twelve months ago, and he currently has $550,000. What important ratio can he calculate from this information?

An income statement is a snapshot of what a company owns (called assets) and what it owes (called liabilities) at a point in time.

Which of the following profitability ratios measures the firm's efficiency in generating sales and profits from the total amount invested in the company?

Explain the difference between an income statement and a balance sheet.

The gross profit margin is the percentage of each sales dollar that a firm earns in profit after all expenses have been paid.

In the context of financial statements, which of the following represents the systematic reduction over time in the value of certain company assets?

The difference between assets and liabilities of a company is referred to as owner's equity.

Subtracting depreciation and net interest expense from the firm's operating profit reveals the firm's taxable income.

Receivables are collected credit sales.

A balance sheet contains more marketing-related information than an income statement.

Cost of goods sold represents the revenue a firm receives from goods sold to customers.

Venus Inc., a software consulting firm, had depreciation of $20.8 million and a net interest expense of $3.2 million for the past year. The firm's operating profit for the same year was $319.0 million. What was the firm's taxable income for the past year?

Venus Inc., a software consulting firm, had made a gross profit of $350.0 million for the year 2012. For the same year, it had made sales of $890.0 million. What was its gross profit margin?