Exam 5: Competitive Advantage, Firm Performance, and Business Models

A firm has 30 million shares outstanding, and each share is traded at $100. Also, each shareholder gets a dividend of $2,000 annually. In this case, the market capitalization is

Both Saturn Technologies and Granite Inc. incur a cost of $200 to manufacture a single unit of a cell phone. However, Saturn Technologies charges a higher price than Granite Inc. does, but it still sells a higher number of phones. What does this imply?

Once a firm chooses a business model, it must stick with it for the life of the firm.

Unlike the financial ratios based on accounting data, total return to shareholders is

The market capitalization of a public company is $5 billion. Each share of the company is traded at $200. What do you infer from this financial data?

________ denotes the dollar amount a consumer would attach to a good or service.

By selling a laptop at $1,000 for which consumers are willing to pay up to $1,200, a consumer electronics firm makes a profit of $400 per unit. In this scenario, the amount $600, that is ($1200 - $1000) + $400, is the

A firm will always see its stock price appreciate when it demonstrates measurable growth.

Generally speaking, a firm will create value if its return on invested capital (ROIC) is less than the cost of capital.

The management team for Volcanic Batteries came up with the following vision statement: "Volcanic Batteries will conscientiously track its financial performance to ensure profits for its investors, enhance its community through employment and supporting charities, and dispose of waste in a manner that will not harm the environment." This vision statement is most likely based on the

Polygon sells its e-book readers at the cost price of $15 each. However, the company makes its profits when users have to download or buy books online. Which of the following business models is Polygon implementing?

Zelda is a recent fashion graduate. She started her own apparel store with an investment of $300,000. In the first year she made a profit of $60,000. If she had taken up a job as a fashion editor for a magazine, she would have earned $50,000 as salary per year. Also, she could have invested her capital, $300,000, in treasury bonds and earned an interest of $12,000. Thus, the amount $62,000 ($50,000 + $12,000) would be Genevieve's

The efficient market hypothesis suggests that the market price of a firm's stock is an objective indicator of a firm's past, current, and expected future performance.

A defining characteristic of the subscription-based business model is that the

A firm incurs $100 to manufacture an office table. It fixes the market price of the table as $250, and discounts the price to $200. However, the maximum a person is willing to pay for it is $180. What is the amount of total perceived consumer benefits in this scenario?

A company's total asset base consists of its current assets plus plant, property, and equipment (PPE).

In the why, what, who, and how of business models framework, the why dimension asks "why does the business model create value?"

Which of the following is an external performance metric?

Accounting data focus mainly on tangible assets, which are no longer the most important. Elaborate on this statement.

The three financial ratios that constitute return on revenue are Cost of goods sold/Revenue, Research & development expense/Revenue, and