Operating income $125,000 Net sales $1,200,000 Total assets $300,000 Management's required rate of return 15% 1) What is Ace's profit margin ratio? A) 25,0% B) 10.4% C) 41.7% D) 15.0% 2) What is Ace's asset turnover ratio? A) 9.6 B) 6.7 C) 10.4 D) 4.0 I 3) What is Ace's return on investment (ROI)? A) 29.4% B) 60.0% C) 41.7% D) 15.0% 4) What is Ace's residual income (RI)? A $45,000 B) $175,000 C) $18.750 D) $80,000 5) A firm may prefer to use residual income instead of return on investment to evaluate a division's performance because: A) Residual income is a ratio but return on investment is an absolute figure B) Residual income leads to better goal congruence than return on investment C) Residual income is easier to calculate than return on investment D) Residual income can be broken into the profit margin ratio and the asset turnover ratio 6) A company is a price-taker when: A) It pricing approach emphasizes cost-plus pricing B) Its product is unique C) It has considerable flexibility in setting prices of its products D) It operates in a highly competitive market 7) Which part of the balanced Scorecard asks, 'How do we look to external investors and creditors?" A) Financial perspective B) Customer perspective C) Internal business perspective D) Learning and growth perspective 8) Which part of the balanced scorecard asks, "How can we continue to do our jobs better? A) Financial perspective B) Customer perspective C) Internal business perspective D) Learning and growth perspective 9) To analyze short-term business decisions, a firm should focus on: A) Historic costs and costs that do not change under the alternatives B) Qualitative data only, but ignore future cash flows C) Relevant revenues and/or costs and use the contribution margin approach D) Sunk costs and quantitative data