1.        Higher unit sales

(A) always result in a higher Return on Sales

(B) always result in a lower Return on Sales

(C) may result in either a higher or lower Return on Sales

(D) match Return on Sales on a percentage basis

2.        Would the same percentage increase in revenue and expenses be more likely in

1.) a low fixed cost environment, 2.) a high fixed cost environment,

3.) a low variable cost environment, 4.) a high variable cost environment

(A) 1 & 3

(B) 1 & 4

(C) 2 & 3

(D) 2 & 4

3.        The same percentage increase in revenue and expenses would result in

(A) a higher net income

(B) a lower net income

(C) the same net income

(D) a loss

4.        The same increase in revenue and expense in absolute terms (dollars) will leave you with

(A) a higher net income

(B) a lower net income

(C) the same net income

(D) impossible to determine with data provided

5.        Last year we sold 500 widgets, which produced $1,000 in revenue. All of our costs were variable costs and they totaled $600. This year we plan on spending an additional $100 on an advertising campaign. With the information provided, what calculation/ratio or formula would you use to easily determine how many additional widgets you must sell in order to maintain the same net income?

(A) Return on Sales

(B) Break Even

(C) Net Income

(D) Cost per Unit

6.        Which of the following are NOT Balance Sheet Accounts

1.)Asset, 2.)Equity, 3.)Expense, 4.)Liability, 5.)Revenue

(A) 1 & 3

(B) 2 & 4

(C) 3 & 5

(D) 4 & 1

7.        Which of the following are DEBIT Accounts

1.)Asset, 2.)Equity, 3.)Expense, 4.)Liability, 5.)Revenue

(A) 1 & 3

(B) 2 & 4

(C) 3 & 5

(D) 4 & 1

8.        If you know the Equity Multiplier you can easily calculate a company's percentage of

1.)Asset, 2.)Equity, 3.)Expense, 4.)Liability, 5.)Revenue

(A) 1, 2 & 4

(B) 1, 2 & 5

(C) 1, 3 & 5

(D) 2, 3 & 5

9.        Assuming all costs are variable and average inventory is a constant, which combination would provide you with the highest profit?

(A) ROS = 9% and Inventory Turn = 9

(B) ROS = 8% and Inventory Turn = 10

(C) ROS = 8% and Inventory Turn = 11

(D) ROS = 7% and Inventory Turn = 12

10.      Which of the following is true about ROI? It ALWAYS equals:

1.) EAT/Assets 2.) EAT/Equity 3.) EAT/Sales 4.) EAT/Net Income

(A) 1 Only

(B) 2 Only 

(C) 3 OR 4 

(D) Neither A, B or C

11.      Assuming your net income figure remains the same, if you raise your debt ratio from 70% to 80 % what effect will it have on your ROE?

(A) New ROE will be 110% of Old ROE 

(B) New ROE will be 133% of Old ROE

(C) New ROE will be 150% of Old ROE

(D) New ROE will be 180% of Old ROE

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