Capsim Final

Topics: Balance sheet, Depreciation, Cash flow, Asset, Cash flow statement, Generally Accepted Accounting Principles / Pages: 11 (1500 words) / Published: May 19th, 2015
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This year Andrews achieved an ROE of 6.0%. Suppose management takes measures that increase Asset turnover (Sales/Total Assets) next year. Assuming Sales, Profits, and financial leverage remain the same, what effect would you expect this action to have on Andrews's ROE?
Select: 1

Andrews ROE will increase.

Andrews ROE will remain the same.

Andrews ROE will decrease.

On the income statement, which of the following would be classified as a variable cost?
Select: 1

Depreciation Expense

Direct Material Expense

Promotion Expense

R&D Expense

It is January 2nd and senior management of Digby meets to determine their investment plan for the year. They decide to fully fund a plant and equipment purchase by issuing $10,000,000 in bonds. Assume the bonds are issued at face value and leverage changes to 2.7. Which of the following statements are true? Select all that apply.
Select: 3

Total Assets will rise to $217,704,645

Total liabilities will be $132,587,422

Working capital will remain the same at $14,357,642

Digby’s long-term debt will rise by $9,000,000

The total investment for Digby will be $203,218,772
Digby's turnover rate for this year is 6.36%. This rate is projected to remain the same next year and no further downsizing will occur from automating. What would the total recruiting cost be for Digby, assuming it spends the same amount extra above the $1,000 recruiting base as they did this year?
Select: 1

$191,175

$159,313

$318

$2,503,035

Which description best fits Andrews? For clarity:

- A differentiator competes through good designs, high awareness, and easy accessibility.
- A cost leader competes on price by reducing costs and passing the savings to customers.
- A broad player competes in all parts of the market.
- A niche player competes in selected parts of the market.

Which of these four statements best describes your company's current strategy?
Select: 1

Andrews is a broad differentiator

Andrews is a niche

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