Globus Quiz 2 - Answers - Part 1.
Which of the following is NOT an action company co-managers can take to help
meet or beat
the investor-expected increases in the company's stock price in upcoming years?
- Making it company practice to issue additional shares of stock each year and use the
proceeds to pay down the debt outstanding until the company's debt-equity
percentages reach 20% or lower for debt and 80% or more for equity
- Increasing annual dividend payments to shareholders most every year
- Making it a frequent management practice to allocate a portion of internal cash flows
from
operations to repurchasing shares of the company's common stock
- Putting increased attention on boosting operating profits in all four geographic regions
-- the
resulting growth in operating profits companywide will act to increase total net profits
and
EPS; higher earnings per share are an important driver of the company's stock price
- When the company's stock price drops because of unexpectedly weak company
performance
in the prior year but is expected to recover and rise in the next several decision rounds.
opting to borrow money preferably in the form of 1-year loans from the Global
Community
Bank (but not so much as to impair the company's credit rating) and using the borrowed
funds to repurchase outstanding shares of common stock
2.
Which of the following is NOT an action company co-managers can take that has
good potential
for increasing the company's average ROE and helping the company meet or beat
the investorexpected ROE targets in upcoming years?
- Pursuing efforts to boost total operating profits in all four geographic regions -- the
resulting
growth in operating profits companywide will increase total net profits (a company's net
profits
are the numerator in calculating the company's ROE)
- Paying a small annual dividend to shareholders (less than $0.50 per share) which is
increased annually by about $0.05 per shares; a small but growing dividend provides
the company with more cash to fund capital expenditures and/or pay down bank
borrowings ahead of schedule
1 / 2
- Using a portion of the company's internal cash flows from operations for the next
several
years to repurchase shares of common stock
- Borrowing money from the Global Community Bank (preferably in the form of a 1-year
loan
that can be fully or mostly repaid the following year) and using the proceeds to
repurchase
outstanding shares of common stock: such action makes considerable financial sense
when
the company's stock price is expected to rise substantially in future years and/or when
unexpectedly weak company performance in the prior year causes a drop in its stock
price
- Increasing annual dividend payments to shareholders (because all net profits not paid
out as
dividends are treated as retained earnings and because bigger retained earnings have
the
effect of increasing shareholders equity)
3. Which one of the following is NOT a way to improve the P/Q rating of a
company's brand of
action-capture cameras?
- Adding one or two more extra performance features
- Increasing the image sensor size and the resolution of the LCD display screen
- Increasing expenditures for camera R&D
- Spending several more dollars on the camera housing and on included accessories
- Increasing the number of models in the company's lineup of multi-featured cameras
4. If a company pays each camera PAT member a base wage of $21,000, thereby
resulting in base
wages of $84,000 per 4-person PAT, and if camera PATs work an average of 2,000
hours per
year to assemble 3,000 cameras annually, it follows that
- the hourly base wage cost for a PAT to assemble a camera would be $30.00 and that
the
labor cost of assembling a camera at overtime would be $60.00 per PAT.
- the hourly base wage cost for a PAT to assemble a camera would be $28.00 and that
the labor cost of assembling a camera at overtime would be $42.00 per PAT.
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