MGT 190 Exam 2
Question 1
The probability of collecting an outstanding
account receivable __________ the longer
the account remains outstanding.
a. increases
b. decreases
c. remains constant
d. none of the above
Question 2
A radio ad in which of the following time
slots would be most expensive?
a. 10 am to 4 pm
b. 4 pm to 7 pm
c. 7 pm to midnight
d. 6 am to 10 am
Question 3
Although banner ads produce a click-through
rate of just __________ percent, they remain a popular form of advertising on
the World Wide Web
a. less than 10
b. 10 to 25
c. 25 to 50
d. more than 50
Question 4
A times interest earned ratio that is well
above the industry average indicates that:
a. A company is carrying a debt load that is
excessive.
b. A company would be able to meet
the interest payments on its debt with little or no difficulty.
c. A company represents a high credit risk to
bankers and other lenders because of the likelihood of defaulting on its debts.
d. All of the above.
Question 5
In the __________ stage of the product life
cycle, sales volume continues to rise, but profit margins peak and then begin
to decline as competitors enter the market.
a. growth and acceptance
b. maturity
c. saturation
d. decline
Question 6
Only _____ percent of a typical business’s
inventory turns over quickly.
a. 10
b. 20
c. 30
d. 40
Question 7
About 20 percent of the typical company’s
customers account for about __________
percent of its sales.
a. 20
b. 50
c. 65
d. 80
Question 8
__________ is a technique in which a business
marks down the customary price of a popular item in an attempt to draw more
customers.
a. leader pricing
b. price lining
c. uniform delivered pricing
d. bundling
Question 9
Studies show that businesses typically waste
__________ percent of the time it takes to
produce products and services without ever
realizing it.
a. 10 to 20
b. 35 to 50
c. 65 to 80
d. 85 to 99
Question 10
A marketing plan should:
a. determine customer needs and wants through
market research.
b. pinpoint the specific target markets a
company will serve.
c. analyze a firm’s competitive advantages
and build a marketing strategy around them.
d. create a marketing mix that meets customer
needs and wants
e. all of the above.
Question 11
Many creditors look for a times interest
earned ratio of at least _____ before
pronouncing a company a good credit risk.
a. 1:1
b. 2.5:1
c. 4:1
d. 10:1
Question 12
Approximately __________ percent of
industrial and wholesale sales are on credit
a. 40
b. 55
c. 70
d. 90
Question 13
Markup is:
a. the difference between the cost
of a good or service and its selling price.
b. the variable expenses required to produce
a product divided by the sales revenue it generates.
c. the sum of a product’s fixed costs per
unit and its variable costs per unit.
d. the portion of a product’s sales price
that is left over to contribute to covering its variable expenses and earning a
profit after deducting its fixed expenses.
Question 14
Most “bounced” checks occur
because:
a. of fraud.
b. nine out of ten customers fail
to keep their checkbooks balanced.
c. of bank errors.
d. none of the above.
Question 15
Which of the following statements concerning
pricing is true?
a. When setting prices, small business owners
must track competitors’ prices on similar or
identical products and services and so they
can either match them or beat them.
b. For small companies, especially those
competing against large businesses, offering
lower prices is the best way to gain a
competitive advantage.
c. The prices business owners set
for their companies’ goods and services send clear signals to customers about
quality, value, and image.
d. All of the above.
Question 16
Which of the following is not an advantage of
newspaper advertising?
a. Short closing times for advertising copy.
b. Low costs.
c. Rapidly rising readership rates.
d. Flexibility in the size, location, and
timing of advertisements.
Question 17
To be most effective an outdoor ad should:
a. use fancy, upper-case letters in bold
print to attract attention.
b. be located on the left side of the highway
where they will produce the highest recall
scores among viewers.
c. emphasize simplicity, using
short words and short ad copy to get noticed.
d. All of the above.
Question 18
The __________ is a “moving
picture” of a company’s profitability over a specific time
period that compares its expenses against its
revenue to show net profit (or loss).
a. income statement
b. balance sheet
c. statement of cash flows
d. debt ratio
Question 19
A __________ pricing strategy for a new
product or service maintains a relatively low profit margin so that a company
can gain its quick acceptance into the market and
quickly achieve a high volume of sales.
a. penetration
b. skimming
c. sliding down the demand curve
d. cyclical
Question 20
A bank account that automatically moves fund
from checking to an interest-bearing account is called a(n):
a. money market account.
b. zero balance account.
c. sweep account.
d. asset management account.
Question 21
Which of the following statements concerning
advertising is false?
a. With creativity and ingenuity, a small
company can make its advertising voice heard above the clamor of its larger
competitors and still stay within a limited budget.
b. Advertising is a
“luxury” expense that small companies should consider only after they
have covered all of their other expenses.
c. Without a steady advertising and promotion
budget, a small company?s customer base will soon dry up.
d. Because of many factors, including
overwhelming ad clutter, increasingly fragmented audiences, and more skeptical
consumers, companies have had to become more creative in their advertising and
promotional campaigns.
Question 22
__________ are television viewers who flash
from one channel to another, especially during commercials, posing a real
threat to TV advertisers.
a. Flashers
b. Zappers
c. Spammers
d. Jammers
Question 23
When it comes to preparing a business plan, entrepreneurs:
a. should hire professional business plan
writers to write their plans.
b. must recognize that because
every business is unique, every business plan must be tailor-made.
c. should prepare a document that is at least
100 pages in length to prove to potential
lenders and investors that they are
well-prepared.
d. All of the above.
Question 24
Small businesses should maintain a current
ratio of at least:
a. 1:1
b. 2:1
c. 4:1
d. 10:1
Question 25
Blending show business with the retail business,
Golf Galaxy offers its customers a variety of fun features, including an
in-store putting green, a driving range, and a golf simulator that lets golfers
“play” any one of 32 world-famous courses, no matter what the weather outside is. Golf Galaxy is using
which principle of guerrilla marketing?
a. demographic analysis
b. entertailing
c. data mining
d. time compression management
Question 26
The most common channel of distribution for
consumer goods is:
a. manufacturer to consumer
b. manufacturer to retailer to consumer
c. manufacturer to wholesaler to
retailer to consumer
d. none of the above
Question 27
Approximately __________ percent of the
average company’s sales come from existing customers.
a. 20
b. 40
c. 50
d. 70
Question 28
The first step in conducting market research
is:
a. collecting the data
b. analyzing the data
c. defining the problem
d. buying a mailing list from a list broker
Question 29
A company’s contribution margin is:
a. the portion of total revenue that remains
after covering fixed costs to contribute toward meeting variable expenses and
earning a profit.
b. the difference between sales revenue and
total fixed expenses.
c. the portion of total revenue
that remains after covering variable costs to contribute toward meeting fixed
expenses and earning a profit.
d. the difference between sales revenue and
variable expenses.
Question 30
Stop ‘N Shop, a small convenience store, is
running a special sale on candy bars from a particular maker. The candy bars
normally sell for 50 cents each, but Stop ‘N Shop is pricing them at “4
for $1.75” for a limited time. Stop ‘N Shop is using which pricing
technique?
a. zone pricing
b. price lining
c. multiple pricing
d. cash discount
Question 31
Data mining is:
a. the process of tracking shoppers? behavior
on the World Wide Web.
b. a process in which business owners
purchase market research from external sources and then sorts through it to
find the information that they can use to identify their target
customers.
c. a process in which computer
software that uses statistical analysis, database technology, and artificial
intelligence finds hidden patterns, trends, and connections in data so that
business owners can make better marketing decisions and predictions about customers
behavior.
d. None of the above.
Question 32
Which of the following factors must a
business owner consider when setting the final price for goods and services?
a. what the product or service cost
b. competitors’ prices
c. the company’s desired image in the market
d. All of the above
Question 33
A business plan:
a. should be at least 50 pages long to prove
to potential lenders and investors that an entrepreneur has researched the
business opportunity thoroughly.
b. should follow a standard format so that
potential lenders and investors know where to find what they are looking for.
c. does not guarantee success, but
it does improve the chance of succeeding.
d. all of the above
Question 34
Which one of the “five C’s of
credit” is a synonym for cash flow?
a. capacity
b. collateral
c. conditions
d. capital
Question 35
The breakeven point:
a. tells an entrepreneur the level of
operation (in sales dollars or in production quantity) at which a business
neither earns a profit nor incurs a loss.
b. shows the minimum level of activity
required to keep a business in operation.
c. occurs where sales revenue equals total
expenses.
d. all of the above.
Question 36
Although small companies account for 50
percent of all retail sales in the United States, they account for __________
percent of all online sales.
a. 9
b. 15
c. 25
d. 35
Question 37
An effective market analysis in a business
plan should include:
a. a clear definition of the company’s target
market.
b. the types of advertising and promotional
campaigns that will reach the intended
audience most effectively and efficiently.
c. market size and trends.
d. all of the above.
Question 38
High prices and low perceived quality create
a(n) ______ image.
a. contradictory
b. upscale
c. bargain
d. value
Question 39
Under the __________ approach to establishing
an advertising budget, a business owner sees advertising completely as an
expense, not as an investment that produces sales and profits in the future.
a. what-is-affordable
b. percentage of sales
c. matching competitors
d. objective-and-task
Question 40
The __________ ratio expresses the
relationship between the capital contributions to a company from its creditors
and those of its owners; it measures what a business
“owes” to what it “owns.”
a. current
b. debt
c. debt to net worth
d. times interest earned
Question 41
The “big three” of cash management
are:
a. sales, accounts receivable, and accounts
payable
b. sales, inventory, and net income
c. inventory, accounts payable, and
accounts receivable
d. accounts payable, accounts receivable, and
sales
Question 42
When describing the company’s products or
services in a business plan, entrepreneurs should focus on the product’s or
service’s:
a. features
b. price
c. benefits
d. physical characteristics
Question 43
The two-thirds rule says that:
a. only two-thirds of the
entrepreneurs with a viable business venture will find financial backing.
b. of those entrepreneurs who get financing
will get just two-thirds of what they initially
requested.
c. getting the financing to start a business
will take entrepreneurs two-thirds longer than
they expected.
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d. all of the above
Question 44
__________ estimates the sales revenue a
company would lose by measuring the percentage of customers who would leave
because of poor service.
a. Data mining
b. Customer sensitivity analysis
c. Customer alignment
d. Revenue at risk
Question 45
To calculate the breakeven point, a business
owner should use which of the following formulas?
a. total variable expenses / contribution
margin as a percentage of sales
b. total fixed expenses /
contribution margin as a percentage of sales
c. (total revenue – total expenses) / total
revenue
d. contribution margin as a percentage of
sales / total expenses
Question 46
The price range for a product or service is:
a. the final price a business owner
establishes for a product or service, taking into account
the company’s desired image in the market.
b. a function of a single factor: the prices
competitors set for similar goods and services.
c. the area between the price
ceiling defined by customers in the market and the price
floor defined by a company’s cost
structure.
d. the area between the price floor set by a
company’s cost structure and the price ceiling
determined by the prices competitors set for
similar goods and services.
Question 47
The __________ is the first section in a
business plan, but it is the last section to be written.
a. company history
b. list of goals and objectives
c. marketing strategy
d. executive summary
Question 48
The executive summary section of a business
plan:
a. presents a synopsis of the business plan.
b. is a written version of the entrepreneur?s
“elevator pitch.”
c. must capture the reader’s attention so
that he or she will read the rest of the plan.
d. All of the above.
Question 49
A company whose sales are equal to the
breakeven sales will earn:
a. a loss.
b. neither a loss nor a profit.
c. a profit.
d. Cannot say from the information given.
Question 50
A survey by the Yellow Pages Publishers
Association found that _____ percent of businesses had received bogus bills for
Yellow Pages advertising.
a. 20
b. 33
c. 50
d. 80
Question 51
Proving that a profitable market exists
involves two steps:
a. showing customers exist and documenting
their buying power.
b. showing customers are interested
and documenting market claims.
c. showing customer demographics and
documenting the buying cycle.
d. showing customer locations and documenting
their average income.
Question 52
Numerous customer surveys across a variety of
industries show that ___________ is the most important element of service.
a. the personal touch businesses
offer them
b. technology
c. convenience
d. quality
Question 53
Inventory represents the largest investment
for most businesses.
True
False
Question 54
Quantitative data from the entrepreneur’s
market research form the basis of the financial projections throughout the
business plan.
True
False
Question 55
When the typical customer encounters rude or
discourteous service from a company,
he or she
a. does not complain.
b. does not buy from that business again.
c. tells other people about his or her bad
experience with that business.
d. all of the above
Question 56
A company’s cash flow cycle:
a. should be as long as possible to make the
most efficient use of its cash.
b. is the time lag between paying
suppliers for merchandise and collecting payment from customers after selling
it.
c. usually tracks the company’s cycle of
profitability.
d. all of the above.
Question 57
The worst mistake entrepreneurs make when
defining the marketing strategy for their companies is:
a. being overly specific when defining the
target customers at whom they are aiming their products and services.
b. budgeting an excessive amount of money for
marketing and advertising.
c. overwhelming potential lenders and
investors with an excessive amount of detail about their marketing targets and
strategies.
d. failing to define their target
market clearly and trying to make their businesses “everything to
everybody.”
Question 58
In a price war:
a. entrepreneurs usually overestimate the
power of price cuts to attract and retain customers.
b. sales volume rarely rises enough to offset
the lower profit margins associated with a lower price.
c. customers lured by lower prices usually
have very little loyalty toward a business.
d. All of the above.
Question 59
A small music store sets the prices of most
of its CDs at three levels: $12.99, $14.99, and $16.99, even using
brightly-colored labels to indicate each price level. This music
store is using:
a. leader pricing
b. price lining
c. uniform delivered pricing
d. bundling
Question 60
Which of the following is a basic principle
for creating a guerrilla marketing plan?
a. Find a niche and fill it
b. Don’t just sell; entertain.
c. Connect with customers on an emotional
level.
d. All of the above
Question 61
In __________ advertising, a manufacturing
company shares the cost of advertising with a small retailer if the retailer
features its products in those ads.
a. cause
b. shared
c. cooperative
d. conjunctive
Question 62
__________ involves the exchange of goods and
services for other goods and services rather than for cash and is an effective
way to conserve valuable cash.
a. Speculation
b. Arbitrage
c. Barter
d. Leasing
Question 63
The ideal average inventory turnover for a
small company:
a. is 5 times per year.
b. should be as low as possible if a business
is to maximize its profitability.
c. depends on the type of business
involved, its size, its profitability, marketing strategy, and other factors.
d. none of the above.
Question 64
Which of the following is not an effective
way to improve the level and quality of customer service in a company?
a. When you create a dissatisfied customer,
fix the problem fast.
b. Discourage customers from
complaining; giving them the chance to verbalize their complaints only
alienates them more.
c. Ask employees for ideas on how to improve
customer service; studies show that
front-line workers can predict nearly 90
percent of the cases that produce customer
complaints.
d. None. All of the above are effective ways
to improve the level and quality of customer
service in a company?
Question 65
Breakeven volume equals:
a. Total Variable Costs / (Sales Price per
Unit – Variable Costs per Unit)
b. Total Fixed Costs / (Sales Price
per Unit – Variable Costs per Unit)
c. Fixed Costs per Unit / (Sales Price per
Unit – Variable Costs per Unit)
d. Variable Costs per Unit / (Sales Price per
Unit – Fixed Costs per Unit)
Question 66
To capitalize on the diversity that the
domestic market provides, small businesses should:
a. use a “shotgun approach” to
marketing, firing marketing blasts at every potential customer they see, hoping
to capture some of them.
b. pursue a “one-size-fits-all”
marketing approach designed to appeal to the mass market so that they can reach
as many potential customers as possible.
c. follow a “rifle
approach” to marketing, focusing on narrow market segments and taking the
time to recognize, understand, and cater to the specific needs of each segment.
d. try to outspend their competitors in advertising,
promotional, and marketing campaigns.
Question 67
Given the following comparisons between the
ratios for Marion’s Hardware and those
for the typical firm in the industry
(measured by the industry median), which of the
following statements is false? Marion’s
Hardware Industry Median Current ratio 1.96:1
1.84:1 Debt to net worth 2.48:1 1.75:1
Average inventory turnover ratio 2.20 per year
4.7 per year Net profit on equity ratio
19.72% 11.38%
a. Marion’s Hardware should have no trouble
paying its short-term debt; the company’s liquidity appears to be sound.
b. Inventory is moving through Marion’s
Hardware slowly compared to the industry average. The owner should find out
what is causing this problem before it threatens the business.
c. Because Marion’s Hardware is not
overburdened with debt, the company would find it very easy to borrow money,
especially from traditional loan sources such as banks.
d. Marion’s Hardware appears to suffer from
undercapitalization; that is, the owners have not invested enough of their own
money in the company and must rely on creditors for financing.
Question 68
A business plan that an entrepreneur is
planning to present to someone outside the company should:
a. be visually appealing, including color
charts, figures, and diagrams to illustrate key
points.
b. be free of spelling and grammatical
errors.
c. include a table of contents that makes it
easy for the reader to navigate the plan.
d. all of the above.
Question 69
What are the characteristics of my customers
. . . their ages, education levels, income,gender, marital status, and other
features?” Questions such as these address which
type of marketing information?
a. geographic
b. demographic
c. psychographic
d. monolithic
Question 70
Billing a portion of customers each day or
week, instead of billing all customers all at once:
a. is called cycle billing.
b. may smooth out cash receipts.
c. is called cycle billing and may
smooth out cash receipts.
d. None of the above.
Question 71
__________ is any sales presentation that is
nonpersonal in nature and is paid for by an identified sponsor.
a. publicity
b. personal selling
c. advertising
d. promotion
Question 72
The owner of a small dry cleaners sponsored a
community event in which he offered to take in winter coats donated by
customers, clean them at no cost, and then distribute them to the needy through
a local charity dedicated to helping needy people in the community. This
business owner was using:
a. cooperative advertising
b. cause marketing
c. shared advertising
d. event relations
Question 73
When making a business plan presentation, an
entrepreneur should:
a. plan to have at least one hour to explain
the business, its benefits and its value.
b. explain in detail the technology or the
mechanics behind the product or service and the effort and time required to
develop it.
c. Use visual aids to punctuate the
presenter’s spoken message and to focus the audience’s attention on the most
important points.
d. All of the above.
Question 74
The __________ ratio measures the percentage
of a company’s sales that remains as profit after paying all of its expenses.
a. current
b. quick
c. net profit on sales
d. net profit to equity
Question 75
To minimize bad debt losses, small business
owners should:
a. screen customers carefully before granting
them credit.
b. ask customers to complete a detailed
credit application that will enable business owners to judge their
creditworthiness.
c. check customers’ credit references.
d. establish a firm credit-granting policy
and inform every customer in advance of their companies’ credit terms.
e. All of the above.
Question 76
The Downtown Hobby Shop expects net daily
sales of $1200, with the cost of goods sold at $750 and total expenses of $250.
Variable expenses, including cost of goods sold, is estimated at $800, with
fixed expenses of $200. What is the contribution margin?
a. 33%
b. 25%
c. 27%
d. 75%
Question 77
The role of cash __________ is an entrepreneur’s
first and foremost responsibility as a company’s cash manager and is an
on-going job, not a one-time task.
a. finder
b. planner
c. collector
d. conserver
Question 78
The first and most important function a
business plan serves is:
a. guiding a startup company’s
operations by charting its future course and devising a strategy for following
it.
b. attracting money from lenders and
investors.
c. convincing suppliers to sell to a startup
company on credit.
d. to attract customers and clients who
otherwise would not consider doing business with
a startup company.
Question 79
A low net sales to working capital ratio
indicates the firm is not using its working capital efficiently.
True
False
Question 80
The __________ cost of an advertisement
measures its cost per potential customer reached.
a. absolute
b. relative
c. differential
d. parametricMGT 190 Exam 2Question 1The probability of collecting an outstanding
account receivable __________ the longerthe account remains outstanding.a. increasesb. decreasesc. remains constantd. none of the aboveQuestion 2A radio ad in which of the following time
slots would be most expensive?a. 10 am to 4 pmb. 4 pm to 7 pmc. 7 pm to midnightd. 6 am to 10 amQuestion 3Although banner ads produce a click-through
rate of just __________ percent, they remain a popular form of advertising on
the World Wide Weba. less than 10b. 10 to 25c. 25 to 50d. more than 50Question 4A times interest earned ratio that is well
above the industry average indicates that:a. A company is carrying a debt load that is
excessive.b. A company would be able to meet
the interest payments on its debt with little or no difficulty.c. A company represents a high credit risk to
bankers and other lenders because of the likelihood of defaulting on its debts.d. All of the above.Question 5In the __________ stage of the product life
cycle, sales volume continues to rise, but profit margins peak and then begin
to decline as competitors enter the market.a. growth and acceptanceb. maturityc. saturationd. declineQuestion 6Only _____ percent of a typical business’s
inventory turns over quickly.a. 10b. 20c. 30d. 40Question 7About 20 percent of the typical company’s
customers account for about __________percent of its sales.a. 20b. 50c. 65d. 80Question 8__________ is a technique in which a business
marks down the customary price of a popular item in an attempt to draw more
customers.a. leader pricingb. price liningc. uniform delivered pricingd. bundlingQuestion 9Studies show that businesses typically waste
__________ percent of the time it takes toproduce products and services without ever
realizing it.a. 10 to 20b. 35 to 50c. 65 to 80d. 85 to 99Question 10A marketing plan should:a. determine customer needs and wants through
market research.b. pinpoint the specific target markets a
company will serve.c. analyze a firm’s competitive advantages
and build a marketing strategy around them.d. create a marketing mix that meets customer
needs and wantse. all of the above.Question 11Many creditors look for a times interest
earned ratio of at least _____ beforepronouncing a company a good credit risk.a. 1:1b. 2.5:1c. 4:1d. 10:1Question 12Approximately __________ percent of
industrial and wholesale sales are on credita. 40b. 55c. 70d. 90Question 13Markup is:a. the difference between the cost
of a good or service and its selling price.b. the variable expenses required to produce
a product divided by the sales revenue it generates.c. the sum of a product’s fixed costs per
unit and its variable costs per unit.d. the portion of a product’s sales price
that is left over to contribute to covering its variable expenses and earning a
profit after deducting its fixed expenses.Question 14Most “bounced” checks occur
because:a. of fraud.b. nine out of ten customers fail
to keep their checkbooks balanced.c. of bank errors.d. none of the above.Question 15Which of the following statements concerning
pricing is true?a. When setting prices, small business owners
must track competitors’ prices on similar oridentical products and services and so they
can either match them or beat them.b. For small companies, especially those
competing against large businesses, offeringlower prices is the best way to gain a
competitive advantage.c. The prices business owners set
for their companies’ goods and services send clear signals to customers about
quality, value, and image.d. All of the above.Question 16Which of the following is not an advantage of
newspaper advertising?a. Short closing times for advertising copy.b. Low costs.c. Rapidly rising readership rates.d. Flexibility in the size, location, and
timing of advertisements.Question 17To be most effective an outdoor ad should:a. use fancy, upper-case letters in bold
print to attract attention.b. be located on the left side of the highway
where they will produce the highest recallscores among viewers.c. emphasize simplicity, using
short words and short ad copy to get noticed.d. All of the above.Question 18The __________ is a “moving
picture” of a company’s profitability over a specific timeperiod that compares its expenses against its
revenue to show net profit (or loss).a. income statementb. balance sheetc. statement of cash flowsd. debt ratioQuestion 19A __________ pricing strategy for a new
product or service maintains a relatively low profit margin so that a company
can gain its quick acceptance into the market andquickly achieve a high volume of sales.a. penetrationb. skimmingc. sliding down the demand curved. cyclicalQuestion 20A bank account that automatically moves fund
from checking to an interest-bearing account is called a(n):a. money market account.b. zero balance account.c. sweep account.d. asset management account.Question 21Which of the following statements concerning
advertising is false?a. With creativity and ingenuity, a small
company can make its advertising voice heard above the clamor of its larger
competitors and still stay within a limited budget.b. Advertising is a
“luxury” expense that small companies should consider only after they
have covered all of their other expenses.c. Without a steady advertising and promotion
budget, a small company?s customer base will soon dry up.d. Because of many factors, including
overwhelming ad clutter, increasingly fragmented audiences, and more skeptical
consumers, companies have had to become more creative in their advertising and
promotional campaigns.Question 22__________ are television viewers who flash
from one channel to another, especially during commercials, posing a real
threat to TV advertisers.a. Flashersb. Zappersc. Spammersd. JammersQuestion 23When it comes to preparing a business plan, entrepreneurs:a. should hire professional business plan
writers to write their plans.b. must recognize that because
every business is unique, every business plan must be tailor-made.c. should prepare a document that is at least
100 pages in length to prove to potentiallenders and investors that they are
well-prepared.d. All of the above.Question 24Small businesses should maintain a current
ratio of at least:a. 1:1b. 2:1c. 4:1d. 10:1Question 25Blending show business with the retail business,
Golf Galaxy offers its customers a variety of fun features, including an
in-store putting green, a driving range, and a golf simulator that lets golfers
“play” any one of 32 world-famous courses, no matter what the weather outside is. Golf Galaxy is using
which principle of guerrilla marketing?a. demographic analysisb. entertailingc. data miningd. time compression managementQuestion 26The most common channel of distribution for
consumer goods is:a. manufacturer to consumerb. manufacturer to retailer to consumerc. manufacturer to wholesaler to
retailer to consumerd. none of the aboveQuestion 27Approximately __________ percent of the
average company’s sales come from existing customers.a. 20b. 40c. 50d. 70Question 28The first step in conducting market research
is:a. collecting the datab. analyzing the datac. defining the problemd. buying a mailing list from a list brokerQuestion 29A company’s contribution margin is:a. the portion of total revenue that remains
after covering fixed costs to contribute toward meeting variable expenses and
earning a profit.b. the difference between sales revenue and
total fixed expenses.c. the portion of total revenue
that remains after covering variable costs to contribute toward meeting fixed
expenses and earning a profit.d. the difference between sales revenue and
variable expenses.Question 30Stop ‘N Shop, a small convenience store, is
running a special sale on candy bars from a particular maker. The candy bars
normally sell for 50 cents each, but Stop ‘N Shop is pricing them at “4
for $1.75” for a limited time. Stop ‘N Shop is using which pricingtechnique?a. zone pricingb. price liningc. multiple pricingd. cash discountQuestion 31Data mining is:a. the process of tracking shoppers? behavior
on the World Wide Web.b. a process in which business owners
purchase market research from external sources and then sorts through it to
find the information that they can use to identify their targetcustomers.c. a process in which computer
software that uses statistical analysis, database technology, and artificial
intelligence finds hidden patterns, trends, and connections in data so that
business owners can make better marketing decisions and predictions about customers
behavior.d. None of the above.Question 32Which of the following factors must a
business owner consider when setting the final price for goods and services?a. what the product or service costb. competitors’ pricesc. the company’s desired image in the marketd. All of the aboveQuestion 33A business plan:a. should be at least 50 pages long to prove
to potential lenders and investors that an entrepreneur has researched the
business opportunity thoroughly.b. should follow a standard format so that
potential lenders and investors know where to find what they are looking for.c. does not guarantee success, but
it does improve the chance of succeeding.d. all of the aboveQuestion 34Which one of the “five C’s of
credit” is a synonym for cash flow?a. capacityb. collateralc. conditionsd. capitalQuestion 35The breakeven point:a. tells an entrepreneur the level of
operation (in sales dollars or in production quantity) at which a business
neither earns a profit nor incurs a loss.b. shows the minimum level of activity
required to keep a business in operation.c. occurs where sales revenue equals total
expenses.d. all of the above.Question 36Although small companies account for 50
percent of all retail sales in the United States, they account for __________
percent of all online sales.a. 9b. 15c. 25d. 35Question 37An effective market analysis in a business
plan should include:a. a clear definition of the company’s target
market.b. the types of advertising and promotional
campaigns that will reach the intendedaudience most effectively and efficiently.c. market size and trends.d. all of the above.Question 38High prices and low perceived quality create
a(n) ______ image.a. contradictoryb. upscalec. bargaind. valueQuestion 39Under the __________ approach to establishing
an advertising budget, a business owner sees advertising completely as an
expense, not as an investment that produces sales and profits in the future.a. what-is-affordableb. percentage of salesc. matching competitorsd. objective-and-taskQuestion 40The __________ ratio expresses the
relationship between the capital contributions to a company from its creditors
and those of its owners; it measures what a business”owes” to what it “owns.”a. currentb. debtc. debt to net worthd. times interest earnedQuestion 41The “big three” of cash management
are:a. sales, accounts receivable, and accounts
payableb. sales, inventory, and net incomec. inventory, accounts payable, and
accounts receivabled. accounts payable, accounts receivable, and
salesQuestion 42When describing the company’s products or
services in a business plan, entrepreneurs should focus on the product’s or
service’s:a. featuresb. pricec. benefitsd. physical characteristicsQuestion 43The two-thirds rule says that:a. only two-thirds of the
entrepreneurs with a viable business venture will find financial backing.b. of those entrepreneurs who get financing
will get just two-thirds of what they initiallyrequested.c. getting the financing to start a business
will take entrepreneurs two-thirds longer thanthey expected.Take Assessment: MGT 190 Exam 2
http://coursesite.umtweb.edu/webapps/assessment/take/launch.j…9 of 17 2/27/15, 3:14 PMd. all of the aboveQuestion 44__________ estimates the sales revenue a
company would lose by measuring the percentage of customers who would leave
because of poor service.a. Data miningb. Customer sensitivity analysisc. Customer alignmentd. Revenue at riskQuestion 45To calculate the breakeven point, a business
owner should use which of the following formulas?a. total variable expenses / contribution
margin as a percentage of salesb. total fixed expenses /
contribution margin as a percentage of salesc. (total revenue – total expenses) / total
revenued. contribution margin as a percentage of
sales / total expensesQuestion 46The price range for a product or service is:a. the final price a business owner
establishes for a product or service, taking into accountthe company’s desired image in the market.b. a function of a single factor: the prices
competitors set for similar goods and services.c. the area between the price
ceiling defined by customers in the market and the pricefloor defined by a company’s cost
structure.d. the area between the price floor set by a
company’s cost structure and the price ceilingdetermined by the prices competitors set for
similar goods and services.Question 47The __________ is the first section in a
business plan, but it is the last section to be written.a. company historyb. list of goals and objectivesc. marketing strategyd. executive summaryQuestion 48The executive summary section of a business
plan:a. presents a synopsis of the business plan.b. is a written version of the entrepreneur?s
“elevator pitch.”c. must capture the reader’s attention so
that he or she will read the rest of the plan.d. All of the above.Question 49A company whose sales are equal to the
breakeven sales will earn:a. a loss.b. neither a loss nor a profit.c. a profit.d. Cannot say from the information given.Question 50A survey by the Yellow Pages Publishers
Association found that _____ percent of businesses had received bogus bills for
Yellow Pages advertising.a. 20b. 33c. 50d. 80Question 51Proving that a profitable market exists
involves two steps:a. showing customers exist and documenting
their buying power.b. showing customers are interested
and documenting market claims.c. showing customer demographics and
documenting the buying cycle.d. showing customer locations and documenting
their average income.Question 52Numerous customer surveys across a variety of
industries show that ___________ is the most important element of service.a. the personal touch businesses
offer themb. technologyc. convenienced. qualityQuestion 53Inventory represents the largest investment
for most businesses.TrueFalseQuestion 54Quantitative data from the entrepreneur’s
market research form the basis of the financial projections throughout the
business plan.TrueFalseQuestion 55When the typical customer encounters rude or
discourteous service from a company,he or shea. does not complain.b. does not buy from that business again.c. tells other people about his or her bad
experience with that business.d. all of the aboveQuestion 56A company’s cash flow cycle:a. should be as long as possible to make the
most efficient use of its cash.b. is the time lag between paying
suppliers for merchandise and collecting payment from customers after selling
it.c. usually tracks the company’s cycle of
profitability.d. all of the above.Question 57The worst mistake entrepreneurs make when
defining the marketing strategy for their companies is:a. being overly specific when defining the
target customers at whom they are aiming their products and services.b. budgeting an excessive amount of money for
marketing and advertising.c. overwhelming potential lenders and
investors with an excessive amount of detail about their marketing targets and
strategies.d. failing to define their target
market clearly and trying to make their businesses “everything to
everybody.”Question 58In a price war:a. entrepreneurs usually overestimate the
power of price cuts to attract and retain customers.b. sales volume rarely rises enough to offset
the lower profit margins associated with a lower price.c. customers lured by lower prices usually
have very little loyalty toward a business.d. All of the above.Question 59A small music store sets the prices of most
of its CDs at three levels: $12.99, $14.99, and $16.99, even using
brightly-colored labels to indicate each price level. This musicstore is using:a. leader pricingb. price liningc. uniform delivered pricingd. bundlingQuestion 60Which of the following is a basic principle
for creating a guerrilla marketing plan?a. Find a niche and fill itb. Don’t just sell; entertain.c. Connect with customers on an emotional
level.d. All of the aboveQuestion 61In __________ advertising, a manufacturing
company shares the cost of advertising with a small retailer if the retailer
features its products in those ads.a. causeb. sharedc. cooperatived. conjunctiveQuestion 62__________ involves the exchange of goods and
services for other goods and services rather than for cash and is an effective
way to conserve valuable cash.a. Speculationb. Arbitragec. Barterd. LeasingQuestion 63The ideal average inventory turnover for a
small company:a. is 5 times per year.b. should be as low as possible if a business
is to maximize its profitability.c. depends on the type of business
involved, its size, its profitability, marketing strategy, and other factors.d. none of the above.Question 64Which of the following is not an effective
way to improve the level and quality of customer service in a company?a. When you create a dissatisfied customer,
fix the problem fast.b. Discourage customers from
complaining; giving them the chance to verbalize their complaints only
alienates them more.c. Ask employees for ideas on how to improve
customer service; studies show thatfront-line workers can predict nearly 90
percent of the cases that produce customercomplaints.d. None. All of the above are effective ways
to improve the level and quality of customerservice in a company?Question 65Breakeven volume equals:a. Total Variable Costs / (Sales Price per
Unit – Variable Costs per Unit)b. Total Fixed Costs / (Sales Price
per Unit – Variable Costs per Unit)c. Fixed Costs per Unit / (Sales Price per
Unit – Variable Costs per Unit)d. Variable Costs per Unit / (Sales Price per
Unit – Fixed Costs per Unit)Question 66To capitalize on the diversity that the
domestic market provides, small businesses should:a. use a “shotgun approach” to
marketing, firing marketing blasts at every potential customer they see, hoping
to capture some of them.b. pursue a “one-size-fits-all”
marketing approach designed to appeal to the mass market so that they can reach
as many potential customers as possible.c. follow a “rifle
approach” to marketing, focusing on narrow market segments and taking the
time to recognize, understand, and cater to the specific needs of each segment.d. try to outspend their competitors in advertising,
promotional, and marketing campaigns.Question 67Given the following comparisons between the
ratios for Marion’s Hardware and thosefor the typical firm in the industry
(measured by the industry median), which of thefollowing statements is false? Marion’s
Hardware Industry Median Current ratio 1.96:11.84:1 Debt to net worth 2.48:1 1.75:1
Average inventory turnover ratio 2.20 per year4.7 per year Net profit on equity ratio
19.72% 11.38%a. Marion’s Hardware should have no trouble
paying its short-term debt; the company’s liquidity appears to be sound.b. Inventory is moving through Marion’s
Hardware slowly compared to the industry average. The owner should find out
what is causing this problem before it threatens the business.c. Because Marion’s Hardware is not
overburdened with debt, the company would find it very easy to borrow money,
especially from traditional loan sources such as banks.d. Marion’s Hardware appears to suffer from
undercapitalization; that is, the owners have not invested enough of their own
money in the company and must rely on creditors for financing.Question 68A business plan that an entrepreneur is
planning to present to someone outside the company should:a. be visually appealing, including color
charts, figures, and diagrams to illustrate keypoints.b. be free of spelling and grammatical
errors.c. include a table of contents that makes it
easy for the reader to navigate the plan.d. all of the above.Question 69What are the characteristics of my customers
. . . their ages, education levels, income,gender, marital status, and other
features?” Questions such as these address whichtype of marketing information?a. geographicb. demographicc. psychographicd. monolithicQuestion 70Billing a portion of customers each day or
week, instead of billing all customers all at once:a. is called cycle billing.b. may smooth out cash receipts.c. is called cycle billing and may
smooth out cash receipts.d. None of the above.Question 71__________ is any sales presentation that is
nonpersonal in nature and is paid for by an identified sponsor.a. publicityb. personal sellingc. advertisingd. promotionQuestion 72The owner of a small dry cleaners sponsored a
community event in which he offered to take in winter coats donated by
customers, clean them at no cost, and then distribute them to the needy through
a local charity dedicated to helping needy people in the community. This
business owner was using:a. cooperative advertisingb. cause marketingc. shared advertisingd. event relationsQuestion 73When making a business plan presentation, an
entrepreneur should:a. plan to have at least one hour to explain
the business, its benefits and its value.b. explain in detail the technology or the
mechanics behind the product or service and the effort and time required to
develop it.c. Use visual aids to punctuate the
presenter’s spoken message and to focus the audience’s attention on the most
important points.d. All of the above.Question 74The __________ ratio measures the percentage
of a company’s sales that remains as profit after paying all of its expenses.a. currentb. quickc. net profit on salesd. net profit to equityQuestion 75To minimize bad debt losses, small business
owners should:a. screen customers carefully before granting
them credit.b. ask customers to complete a detailed
credit application that will enable business owners to judge their
creditworthiness.c. check customers’ credit references.d. establish a firm credit-granting policy
and inform every customer in advance of their companies’ credit terms.e. All of the above.Question 76The Downtown Hobby Shop expects net daily
sales of $1200, with the cost of goods sold at $750 and total expenses of $250.
Variable expenses, including cost of goods sold, is estimated at $800, with
fixed expenses of $200. What is the contribution margin?a. 33%b. 25%c. 27%d. 75%Question 77The role of cash __________ is an entrepreneur’s
first and foremost responsibility as a company’s cash manager and is an
on-going job, not a one-time task.a. finderb. plannerc. collectord. conserverQuestion 78The first and most important function a
business plan serves is:a. guiding a startup company’s
operations by charting its future course and devising a strategy for following
it.b. attracting money from lenders and
investors.c. convincing suppliers to sell to a startup
company on credit.d. to attract customers and clients who
otherwise would not consider doing business witha startup company.Question 79A low net sales to working capital ratio
indicates the firm is not using its working capital efficiently.TrueFalseQuestion 80The __________ cost of an advertisement
measures its cost per potential customer reached.a. absoluteb. relativec. differentiald. parametric