Performance%20Module%20Self%20Test%20Answers - Performance...

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Performance Analysis Self Test The following is designed to test your knowledge of performance assessment, especially related to financial performance. You are encouraged to take the test and try to figure out the answers on your own as a means of preparing for the performance analysis test that will be given in class. If you can answer (and really understand!) these questions, you should be well on your way to being able to do well on the in-class test. NOTE: Answers to these questions will be provided in a separate section. To learn, remember that you need to try to figure out these questions on your own first. Simply memorizing the answers to the questions will not serve you well, since these exact questions will not show up on the test. 1. In assessing performance, the general manager must be concerned with both organizational health and operating performance. If operating performance is neutral but health is positive: a. it is not okay because the neutral operating performance will soon lead to decreased health b. it is not okay because owners always want to see growing profitability c. it is okay because operating performance and organizational health are only weakly correlated over time d. it is okay if the owners are willing to emphasize health over profits Correct answer is d. Owners can determine what level of performance is reasonable for them. This is especially true in private companies. 2. Ratio analysis is a technique that allows managers to, a. compare their business to other businesses in the industry b. compare current results with predicted results c. compare their firm’s performance to some previously selected benchmark d. all the above Correct answer is d. By calculating ratios, performance becomes something that can be compared to both internal and external standards 3. Which of the following is true? a. the income statement reports the results from operating a business for a period of time b. the balance sheet provides a picture of a firm’s operations over a period of time c. the cash flow statement provides a snapshot of a firm’s financial position at a specific point in time d. absolute numbers are more important than ratios in financial analysis Correct answer is a. Balance sheets are at a point in time, while income statement and cash flows are over a period of time (typically a quarter or a year).
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4. If it is determined that in a given year a firm had a return on investment of 10%, we can
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Performance%20Module%20Self%20Test%20Answers - Performance...

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