The balanced scorecard evaluation of the firm is an especially strong financial tool because of its:

Multiple Choice

• Use of quantitative measures.
• Use of multiple critical success factors (CSFs).
• Ability to predict change.
• Use of qualitative measures.

Given a competitive outside market for identical intermediate goods, what is generally considered the best transfer price, assuming all relevant information is readily available?

Multiple Choice

• Full cost, plus a mark-up for profit.
• Market price of the intermediate goods.
• Market price of the intermediate goods, less average production department allocated profit.
• Average cost of production, plus average production department allocated profit.
• Average cost of production.

Return on investment (ROI), residual income (RI), and Economic Value Added (EVA) all have in common which one of the following characteristics?

Multiple Choice

• They are all relative (rather than absolute) performance indicators.
• They all incorporate in the financial performance metric some measure of investment.
• They all incorporate nonfinancial performance measures into the metric.
• They all lead to goal-congruency problems when used to evaluate subunit performance.
• They all rely on the use of data used in the preparation of financial statements (for external reporting).

EVA is calculated as:

Multiple Choice

• Total Net Income EVA Net Income.
• Accounting earnings adjusted for EVA.
• EVA Net Income (Cost of Capital EVA Invested Capital).
• Gross Income Cost of Capital.
• Total Net Income (Cost of Capital Invested Capital).

The method for directly measuring the value of a firm's equity is:

Multiple Choice

• Market value.
• Earnings-based multiple.
• Sales multiple.
• Enterprise value.
• The discounted cash flow method.

The following results pertain to an investment center.

Sales$1,500,000Variable costs800,000Traceable fixed costs100,000Average investment1,000,000Divisional cost of capital (discount rate)10%

How much is the return on investment (ROI) for this investment center?

Multiple Choice

• 5%.
• 50%.
• 60%.
• 70%.
• 75%.