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FinnZ [79.3K]
3 years ago
15

If the CEO of a large, diversified, firm were filling out a fitness report on a division manager (i.e., "grading" the manager),

which of the following situations would be likely to cause the manager to receive a better grade? In all cases, assume that other things are held constant. Justify your response.
a. The division's DSO (days' sales outstanding) is 40, whereas the average for its competitors is 30.
b. The division's basic earning power ratio is above the average of other firms in its industry
c. The division's total assets turnover ratio is below the average for other firms in its industry
d. The division's debt ratio is above the average for other firms in the industry.
Business
2 answers:
PSYCHO15rus [73]3 years ago
8 0

Answer:

The correct option here is B)

A Division manager is much more likely to receive a better grade if it's basic earning power ratio is above the average of other firms in its industry.

Explanation:

Basic Earning Power (BEP) ratio is a financial metric that estimates the earning capacity of business before tax and other leverages are deducted or taken into consideration.

To calculate your BEP ratio, you divide Earning Before Interest and Taxes (EBIT) by the total assets.

A higher BEP shows that the manager is better than other firms at using its assets to generate income.

Equity analysts always assess a company’s BEP before making the decision to invest. Simply put, the BEP shows them if a company’s stock is worth investing in.

Cheers!

aivan3 [116]3 years ago
4 0

Answer:

B.The division's basic earning power ratio is above the average of other firms in its industry

Explanation:

Because The division having Earning Power ratio( EBIT/Total Assets) better than the average of other firms in the industry that means that the firm is using the assets more efficently than the other firms.

Other options are not valid as the total Asset Turnover ratio, Inventory Turnover ratio, DSO are worse than the industry average and the Debt/CApital ratio higher than industry average that means the firm is having a higher risk of leverage. So these factors cannot give a better grade to the division manager.

Only Option b is the perofrmance criterion that will give a better grade to the division manager.

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Large firms with significant slack resources (i.e., are able to launch a greater number of competitive actions) but that remain
Black_prince [1.1K]

Answer:

True.

Explanation:

It is true that large firms with significant slack resources but who remain flexible and act like small firms will be more successful against rivals.

Larger firm with significant high resources need to manage these resources with additional responsibility and there is a high risk of these resources to be remain unutilized or inappropriatly used, which may affect the company´s growth and does not remain flexible in taking risk, however, they can take greater number of competitive actions.

Small firm with lesser resources and less liability help them to be flexible and can take higher risk to be competitve in the market. They learn to optimum utilize the resources and plan new strategy that help them to be more successful against rivals. They are called "Dark horses" in the market.

7 0
3 years ago
Spencer Co. decides to establish a petty cash fund with a beginning balance of $200. The company decides that any purchase under
miv72 [106K]

Answer:

Explanation:

The journal entry is shown below:

Petty cash A/c $200

            To Cash A/c $200

(Being the petty cash fund is established)

Simply we debited the petty cash account and credited the cash account so that the correct posting can be done with the correct item and the correct value.

All other information which is given is not relevant. Hence, ignored it

4 0
3 years ago
Princeton Company acquired 75 percent of the common stock of Sheffield Corporation on December 31, 2011. On the date of acquisit
melamori03 [73]

Answer:

consolidated balance sheet:

land 525,000

Explanation:

The Princeton's land will be valued at book value.

The Sheffield's land will be valued at market value as when Princeton acquired Sheffield the land was appraised at his market value.

So 500,000 x 75% = 375,000 land of Sheffield

<u>Total land:</u>

Princeton Land   150,000

Sheffield  Land <u>  375,000  </u>

              Total    525,000

6 0
3 years ago
When direct materials are used in production, costs are assigned by debiting Work-In-Process Inventory and crediting __________.
astraxan [27]

Answer:

finished goods

Explanation:

I would assume finished goods. At a multiple process step company, you would again credit WIP materials

7 0
3 years ago
What can organizations do to keep rewards individualized enough to meet various employee needs (needs theory) while trying to en
julsineya [31]

Answer:

The best way to go about this is to design and operate and rewards system that recognizes individual needs as summarized and proposed by David McClelland.

The theory of equity on the other hand speaks to the perception of how input is compensated for in relation to those of others. Human beings (workers) will come with varying degrees of skills and input.

So to customize rewards in such a way that it recognizes unique contributions in an equitable way, one must first decide what key skills will be required for each job and which jobs are required to achieve organizational goals and objectives.

Explanation:

The Needs Theory by David Mclelland summarizes individual needs into three. They are:

  1. Achievement
  2. Affiliation
  3. Power

A balanced reward system will have financial and non-financial benefits. some of the non-financial benefits will be tailored to have the above components.

- Achievement: An example of this is - Opportunity for higher assignments

- Affiliation: The need to belong to a strong Employer brand

- Power: This answers the question about whether or not one will become more influential as they progress with the company

The equity theory will guide the business owner in ensuring that all selected metrics of input are classed and priced accordingly.

The usual form of input include but are not limited to:

  • Ability
  • Adaptability
  • Commitment
  • Determination
  • Education
  • Effort
  • Enthusiasm
  • Experience
  • Flexibility
  • Hard Work
  • Loyalty
  • Personal sacrifice
  • Skill
  • Support from co-workers and colleagues
  • Time
  • Tolerance
  • Trust in supervisors

Equity sometimes is difficult to achieve due to issues with capacity on the part of the company. Best practice, however, is to recognize equity first from the perspective of standard industry practice, then match or exceed such offering by a combination of Financial and Non-Financial rewards that are based on the strength of the organization.

Another strategy is for organizations to adapt it's reward systems to  Achievement Based Compensation. This type of compensation instead of focusing on the inputs listed above focuses on results.

In this case, expected results and capacity to deliver and subsequent rewards on same are discussed and agreed upon.

Minimum requirements are also defined ahead of time. Under this kind of structure, equity is achieved, and individual needs are recognized.

Cheers

4 0
2 years ago
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