An operating division of Dell Company has $500,000 in sales, $200,000 in income, and $250,000 in average assets. What is the operating division's investment turnover?

 An operating division of Dell Company has $500,000 in sales, $200,000 in income, and $250,000 in average assets. What is the operating division's investment turnover?

multiple choice
2.0 Correct
0.8
2.5
0.5

Explanation
Knowledge Check 01
 
Investment turnover = sales of $500,000 ÷ average assets of $250,000 = 2.0.

 

A key performance indicator within the internal process measure includes
 
Multiple choice
product costs Correct
cash flow
customer satisfaction
employee satisfaction

Explanation
 
A key performance indicator within the internal process measure includes product costs, defect rates, cycle time, labor hours per order, and accident-free days. 

The management team of Charter Company holds monthly training sessions for its employees. What area of the balanced scorecard are they focusing on?

multiple choice
Innovation / Learning Correct
Financial
Customer
Internal Process

Explanation 
The management team of Charter Company should focus on innovation and learning in training sessions for its employees.

The cash conversion cycle is computed as:

multiple choice
days’ sales in inventory plus days’ sales in accounts payable minus days’ sales in accounts receivable.
days’ sales in accounts receivable plus days’ sales in accounts payable plus days’ sales in accounts receivable.
days’ sales in inventory plus days’ sales in accounts receivable minus days’ payable outstanding. Correct

Explanation
The cash conversion cycle is computed as days’ sales in accounts receivable plus days’ sales in inventory minus the days’ payable outstanding.

Days' sales in accounts receivable    25
Days’ sales in inventory    60
Days' payable outstanding    80
 
The cash conversion cycle is

multiple choice
5 Correct
115
45


Explanation

The cash conversion cycle is computed as days’ sales in accounts receivable of 25 plus days’ sales in inventory of 60 minus the days’ payable outstanding of 80 which equals 5.

Financial statements prepared according to GAAP _____ assign joint costs to products.

multiple choice
must Correct
must not

Explanation
 
Financial statements prepared according to GAAP must assign joint costs to products. If some products are sold and others remain in inventory, allocating joint costs involves assigning costs to both cost of goods sold and ending inventory.