New BSG Quiz 2

BSG Quiz 2 Answers
Please ensure you have the correct answers for your game. There are 2 games the BSG (Blue Shoe
game), Glo-Bus (Green Cameras and Drones game).
The selected answers are the ones that are correct. The simplest way of navigating through this
document is to press find and put down a very unique quote from the question on BSG. For example to
find the answer for the question below would be the find the quote “companies can expect to sell”.
Make sure it is 100% the same question and answers and you will do very well on this quiz. Some
questions have similar wording and the question may be further down the document. Another way to
navigate the document is via the answers. I strongly suggest though that before you actually do the quiz,
just skim through the questions and familiarize yourself with the answers as there is a time limit when
you actually do the quiz.
BSG Quiz 2 is substantially harder than Quiz 1, this quiz also brings about the introduction of what I view
as “concept” questions. These are questions that can be asked in several different ways, but is more or
less the same concept. For example exchange rate questions are important in testing your knowledge in
BSG, and they can be asked in a variety of different ways. For some of the questions that can be
conceptualized in different ways I have written a few notes that helped me figure out the answer when I
encountered it in another form. It is usually those balance sheet questions because BSG is very
particular (sometimes illogical) in how they calculate their values.
The very latest version of BSG also includes questions that relate to determining the “correct” or
“incorrect” conclusion given a set of data from the game. It is very easy to change the question, and I
believe that the software developers even randomize this particular question now.
If you find the odd quiz Answers that isn’t in the bank, please copy and paste it in an email and highlight
it in red and send it to me. I hope you enjoy your purchase! I am offering a temporary promotion of a $1
credit towards my advanced services for every new quiz answer that is brought to my attention.
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< Previous Question 1 Next > B
B
B
The branded operating benchmarking data on p. 7 of each issue of the Footwear Industry B
Report showing the industry-low, industry-average, and industry-high values for operating profit B
per branded pair sold in each geographic region
B
B
have little-decision-making value because the benchmarking data do not identify which B
companies have the lowest/highest operating profit margins per branded pair sold. B
• always merit close attention because when these benchmarks reveal that a company's B
operating profits are negative or unattractively small 1n one or more geographic regions. B
managers are well-advised to pursue immediate corrective actions m the upcoming dec1s1on B
round.
B
are of considerable value to the managers of companies looking for strong evidence that their
company needs to cut branded footwear prices in the internet and wholesale segments B
and/or spend more money on marketing efforts so as to increase branded sales and market B
share in one or more geographic regions. B
have the greatest value to the managers of companies whose market share outcomes were B
below the reported industry-average benchmark for market share in one or more geographic B
regions. B
are most valuable to the managers of companies whose ROE was well below the reported B
ROE industry-average benchmark in one or more regions.
B=I
0 =t
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Qu
<Previous Question 5 e ,
e ,
e,
Assume a company's Income Statement for Year 12 is as follows: e ,
Year12 e ,
Income Statement Data (in 000s) e ,
Net Revenues from Footwear Sales $580,000 e ,
Cost of Pairs Sold 350,000 e ,
Warehouse Expenses
Marketing Expenses
45,000
90,000
e ,
Administrative Expenses 15,000 e ,
Operating Profit (Loss) 80,000 e ,
Interest Income (Expense) (20,000) e ,
Pre-tax Profit (Loss) 60,000 e ,
Income Taxes
Net Profit (LOSS)
18,000
$42,000
e ,
e ,
e,
Based on the above income statement data and the formula for calculating the interest coverage e ,
ratio presented in the Help section for p. 5 of the Footwear Industry Report. the company's e ,
interest coverage ratio is e ,
e ,
3 .00. B=..c
2.20. 0 =~
2.10.
• 4.00.
29.0.
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<PreY1ous Question 6 B
B
B
Under what circumstances should a company's management team attempt to seriously compete B
with rivals to supply private-label footwear to chain retailers in one or more geographic regions? B
B
• When the company has more production capacity than it needs to fill the projected orders for B
branded footwear and when its analysis and projections reveal the company stands a good B
chance of winning a contract at a profit-enhancing offer price B
When the data 1n the latest Competitive Intelligence Report indicates that one or more rival B
firms successfully won contracts to supply private-label footwear at offer prices that were B
attractively profitable B
When the company has the capability to produce private-label footwear at a production cost B
per pair that is at least $5 below its per pair production cost for branded footwear
B
When no seller of private-label footwear in the prior year captured as much as a 20% share B
of the private-label pairs supplied in any given region
B
When the data in the latest Competitive Intelligence Report indicates that some of the
companies competing to supply for private-label footwear were able to win contracts at offer
B
prices above S25 per pair B
B
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< Prelllous Question 10 Next > B
B
B
Which one of the following actions Is unlikely to positively impact a company's sales of branded B
footwear in the North American region? B
B
Offering a number of models/styles in the North America region that exceeds the all-company B
average m North America B
Signing enough celebrilles to endorsement contracts to earn celebrity appeal ratings in North B
America that exceed the North American industry average B
Providing free shipping to online buyers m North America B
• Charging an average wholesale price to North American footwear retailers that is higher than B
the all-company average in North Amenca B
Marketing branded footwear with an S/Q ratmg that is above the industry average in North B
America B
B
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B
<Pre111ous
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Simulation Quiz 2
Qu
< Previous Question 12 e
e
e
Which of the following results from the latest decision round is most helQfUI in guiding the efforts e
of company managers to improve their company's costs and profitability in the upcoming
decision round?
e
B
B
The facility space and production equipment data at the bottom of page 4 of the FIR e
The celebrity endorsement data and the 4 graphs showing branded prices and S/Q rating B
trends in each of the four geographic regions on p. 8 of the FIR. e
• The benchmarking data on pp. 6 and 7 of the FIR e
The comparative financial data on p. 5 of the FIR
e
e
The data on materials prices at the top of p. 4 of the FIR e
e
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e
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B
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Simulation Quiz 2
Qu
< Previous Question 14 e
e
e
If a company spends $28.8 million to install refurbished footwear-making equipment with e
capacity to produce 2 million pairs of athletic footwear at its Asia Pacific production facility, then
its annual depreciation costs at that facility will rise by
e
B
B
8% or $2,304,000. e
5% or $1.440,000. B
4% or $1,152,000.
e
e
2.5% or $720,000. e
• 10% or $2,880,000. e
e
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e
e
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B
B
B=J
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<J1ven me 1011ow1ng Year 1:.11>a1ance sneet data tor a tootwear company: B

Balance Sheet Data B
Cash on Hand $10,000 B
Total Current Assets 100,000 B
Total Fixed Assets 250,000 B
Total Assets $350,000
Accounts Payable $20,000 B
Overdraft Loan Payable 0 B
1-Year Bank Loan Payable 5,000 B
Current Portion of Long-Term Bank Loans 17,000 B
Total Current Liabilities 42,000 B
Long-Term Bank Loans Outstanding 98,000
Total Uabiht1es 140,000 B
Year 11 Year12 B
Shareholder Equity:
Balance Change B
Common Stock 20,000 0 20.000 B
Additional Capital 110,000 0 110,000 B
Retained Earnings 60,000 20,000 80,000
Total Shareholder Equity 190,000 +20,000 210,000 B
Total liabilities and Shareholder EQuitv $350,000 B
B=,
0 =1
Based on the above figures and the definition of the debt-assets ratio presented in the Help
section for p. 5 of the Footwear Industry Report, the company's debt-assets ratio (rounded to 2
decimal places) is
0.38.
0.32.
0.43.
0.57.
• 0.40.
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<Previous Question 17 B Ou•
B Ou•
B Ou,
Which one of the following 1s NOT a way 10 improve the S/Q rating of branded pairs produced at B OUE
a particular production location? B OUE
B Ou•
• Increasing the number of models/styles produced B Ou•

B Ou,
Increasing expenditures for TQM/Six Sigma programs B OuE
Increasing expenditures for best practices training for production workers B OuE
Increasing expenditures for enhanced styling/features B OuE
Increasing the percentage use of superior materials B Ou•

B Que
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<P re vious Question 18 e

e
e
Which of the following statements about striving to reduce labor costs per pair produced at each
of the company's plants is true?
e
e
e
• All companies, regardless of the strategy being employed, should pursue actions to manage e
employee compensation and labor productivity in a manner that results in labor costs per pair e
produced equal to (or very close to) the industry-low in each region where the company has e
plants. e
A company cannot achieve labor costs per pair produced that are well below the industry e
average and close to the lowest in the industry (in each geographic region where it has
production facilities) unless its annual total compensation package is considerably below the
e
average total compensation paid by all companies with production facilities in these same e
regions. e
A company best pathway to achieving low labor costs per branded pair produced is by e
aggressively pursuing all available options to boost labor productivity to the highest possible B
level. B
Because of the progressively higher amounts of lime it takes to produce branded footwear B
having a 7-star or higher S/Q rating. it is very difficult for a company producing branded B
footwear with a S/Q rating of ?-stars or higher to achieve labor costs per pair produced that B
are significantly below the industry average in those geographic regions where it has
production facilities. !:',-=A
Pursuing actions to achieve low labor costs per pair produced at company plants is important 0 -=N
only to those companies striving to be a low-cost/low-price provider of branded athletic
footwear: companies pursuing a strategy to offer buyers premium branded footwear at a
premium price do not really have to be concerned about having low labor costs per pair
produced.
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< Previous Question 19
Assume a company's Income Statement for Year 12 is as follows:

Year12
Income Statement Data _ (!!! 000~
Net Revenues from Footwear Sales S 530,000
Cost of Pairs Sold 340,000
Warehouse Expenses 40,000
Marketing Expenses 80,000
Administrative Expenses 15,000
Operating Profit (Loss) 55,000
Interest Income (Expense) (10,000)
Pre-tax Profit (Loss) 45,000
Income Taxes 13,500
Net Profi1 Loss $31 ,500
Based on the above income statement data and assuming the company has 20 million shares o·
common stock outstanding, the company's operating profit margin and EPS were
• 10.38% and$1 .58.

6.67% and S1 .84.
8.49% and S2.25.
5.94% and S1 .55.
10.4% and S2.75.
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Simulation Quiz 2
< Previous Question 2 Next >
In the private-label operating benchmarks section on p. 7 of each issue of the FIR, the industry-
low, industry-average, and industry-high benchmarks for the margins over direct costs (as
explained in the Help section for this same page) should be in:erpreted as representing
0 how much sellers received on each pair of private-label footwear supplied to chain retailers
over and above direct materials and labor costs--these dollars represent free cash flow that
company managers can use for whatever purpose they see fit.
0 how much sellers of private-label footwear received over and above the costs per pair sold;
these margins, ii positive, serve to improve a seller's operating profit in the designated
region.
() the net profit earned (or lost - - in the case of a negative number) on each pair of private-
- label footwear supplied to a given region's chain retailers.
0 how much sellers of private-label footwear received per pair that were over and above
materials costs and direct labor costs--these dollars are automatically deposited in the
seller's retained earnings account and help boost the seller's ROE and stock price.
0 how much sellers of private-label footwear received per pair that help cover the seller's
corporate overhead and help lower the seller's debt-to-assets ratio.
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Simulation Quiz 2
A company opting to boost its sales of branded footwear by offering buyers 500 models/styles
to choose from should definitely consider
ovnl ,;:,i norl i n tho l,..loln co,-.tinn fru• +h ie c,;:,mo n,;:,no\ chn11l rl ho i n •omrotorl ,;:,c ronl'"oconti nn
() cutting the percentage use of superior materials and conserving on expenditures for
- TQM/Six Sigma quality controls at each of the company's production locations where 500
models are going to be produced in order to help offset the $15 million in annual production
run setup costs for 500 model/styles.
0 instituting production improvement options D at all production locations where 500 models
are to be produced--the use of robot-assisted production of 500 models w ill boost the S/Q
rating of the branded pairs being produced and also eliminate any increase in reject rates
associated with producing 500 models.
0 concentrating all production of 500 models at newly-established production locations in
Europe-Africa and Latin America.
() instituting production improvement options A at each of the production locations where 500
- models/styles are going to be produced.
0 instituting production improvement option B at the production locations where 500 models
will be produced.
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Simulation Quiz 2
The most important/essential results from the latest decision round that company managers
need to review/study in order to guide their strategic moves and decisions to improve their
company's overall performance and competitiveness vis-a-vis rivals in the upcoming decision
round are
0 the data in the Performance Highlights Report and on p . 4 of the FIR.

0 the Income Statement and Balance Sheet data on p. 5 of the FIR.
O the Comparative Competitive Efforts section of the Competitive Intelligence Report for each
of the four geographic regions.
() the celebrity endorsement data and the 4 graphs showing branded prices and S/Q rating
- trends in each of the four geographic regions on p. 8 of the FIR.
0 the Industry Scoreboard and each company's performance on EPS, ROE, stock price, credit
rating and image rating displayed on the first 3 pages of the FIR.
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Simulation Quiz 2
The branded operating benchmarking data on p. 7 of each issue of the Footwear Industry
Report showing the industry-low, industry-average, and industry-high values for operating
profit per branded pair sold in each geographic region
0 always merit close attention because when these benchmarks reveal that a company's
operating profits are negative or unattractively small in one or more geographic regions,
managers are well-advised to pursue immediate corrective actions in the upcoming decision
round.
0 are of considerable value to the managers of companies looking for strong evidence that
their company needs to cut branded footwear prices in the internet and wholesale segments
and/or spend more money on marketing efforts so as to increase branded sales and market
share in one or more geographic regions.
() have little-decision-making value because the benchmarking data do not identify which
- companies have the lowest/highest operating profit margins per branded pair sold.
O have the greates: value to the managers of companies whose market share outcomes were
below the reported industry-average benchmark for market share in one or more geographic
regions.
0 are most valuable to the managers of compan ies whose ROE was well below the reported
ROE industry-average benchmark in one or more regions.
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6.5"
Simulation Quiz 2
Which of the following statements about striving to reduce abor costs per pair produced at
each of the company's production facilities is true?
() As long as labor productivity at a company's production faci lity is in the range of 3,400 to
- 3,600 pairs produced per worker, then labor costs per pair produced at that facility will
closely match the labor costs per pair produced of other compan ies having production
facilities in that same region .
0 Company managers each year should seek to search out a combination of base pay
increases, incentive pay per non-defective pair produced, total compensation, and
expenditures for best practices train ing at each production facility that is projected to yield
the lowest feasible labor cost per pair produced.
0 Companies producing branded footwear with a 7-star or higher S/Q rating are very unlikely
to achieve labor costs per pair produced that are below the industry average in a given
region whereas companies producing branded footwear with an S/Q rating no higher than 4-
stars or less in that same geographic region are virtually assured of having labor costs per
pair that are below the region 's industry average.
O The most effective way for a company to achieve labor costs per pair produced that are
below the industry average is to give workers large increases in base pay (above 10%)
annually and to keep incentive pay below $0. 75 per non-defective pair produced.
0 The easiest way for a company to achieve low labor costs per pair produced is make sure
that all of its production facilities are equipped with new footwear-making equipment rather
than refurbished equipment.
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Given the following data from a Comparative Competitive Efforts page in the CIR: e
Your Industry Your Company e
WHOLESALE SEGMENT Company Average vs. Ind. Avg. e
Wholesale Price ($ per pair) $58.75 $53.83 +9.1% e
S/Q Rating (1 to 10 stars) 8.3 6.3 +31 .7% e
Model Availability
Brand Advertising ($000s)
250
16,500
300
14,350
-16.7%
+15.0%
e
Rebate Offer (S per pair) 3.00 3.40 -11.8% e
Delivery Time (weeks) 2 wks 2.8 wks -28.6% e
Retailer Support {S per outlet) 4,500 4,675 -3.7% e
Retail Outlets 1,698 1,538 +10.4% e
Celebrity Appeal 60 11 1 -45.9% e
Brand Reputation {prior-year average)
Pairs Demanded
87
2,198
79
2,413
+10.1%
+29.7%
e
Gained/Lost {due to stockouts) +9 0 e
Pairs Sold (OOOs) 2,207 2,413 -8.5% e
Market Share (%) 9.1% 10.0% -0.9 ots e
e
Based on the above data for your company, which of the following statements is false?
e
B,
Q ,
() Your company had a competitive advantage in delivering orders for branded footwer to
- retailers.
0 Your company's branded sales volume and market share in the Wholesale segment were
positively impacted by your company's small percentage competitive advantages in brand
reputation, retail outlets, and wholesale price.
0 Your company's biggest percentage competitive disadvantage in the Wholesale Segment
related to celebrity appeal.
() Your company's branded sales volume and market share in the Wholesale segment were
- negatively impacted by your company's competitive effort in model availability and by your
company's low celebrity appeal rating, low rebate offer, and level of retailer support.
() Your company's pairs sold were 9,000 pairs higher than they would otherwise have been
- because other companies in the region did not have sufficient inventory to fill all orders from
retailers, thus causing some retailers to place orders with your company.
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Simulation Quiz 2
The production benchmarks on p. 6 of each issue of the Footwear Industry Report
0 provide the managers of all companies with solid indication of whether their company's total
manufacturing costs are low enough to enable their company to earn total profits that will
meet or beat investor expectations.
0 provide your company's management team with solid evidence regarding the degree to
wh ich various costs at you r company's production facilities are competitive with the
production costs at the production facilities of rival companies.
() are most useful to the managers of companies that are pursuing a strategy to be a low-cost
- provider of branded footwear.
0 are most useful to the managers of companies that are employing a strategy to produce
premium quality branded footwear.
() are less useful than the Branded Operating Benchmarks on p. 7 of the FIR in determining
- whether a company is managing certain aspects of its production facilities in a cost efficient
manner.
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Simulation Quiz 2
If a management team wishes to boost the company's stock price, then it should consider
0 paying off all long-term debt as rapidly as possible, keeping the company's dividend payout
ratio between 25% and 50%, spending additional money on corporate citizenship and
social responsibility, and maintaining a credit rating that is no less than B+.
0 pursuing actions to increase earnings per share each year that meet or beat investor
expectations, raising the company's dividend each year (by at least $0.10 and preferably
$0.25 or more for the increase to have much impact on the stock price), and repurchasing
shares of common stock.
0 increasing the company's retained earnings each year, keeping the company's credit rating
at A (or above), spending amounts on corporate citizenship and social responsibility that are
below the indus:ry average, and issuing sufficient shares of common stock to raise the
funds to pay off all long-term debt within 2 years.
() increasing its effort to boost its market share of branded footwear in all geographic regions,
- spending additional money on corporate citizenship and social responsibility, and keeping
the company's image rating above 75.
() boosting the company's dividend by $0.50 or more every year, increasing the company's
- retained earnings, and paying off all long-term debt as rapidly as possible in order to
achieve an A+ credit rating.
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Simulation Quiz 2
Pursuing a strategy of social responsibility and corporate citizenship
0 has the positive impact of increasing overall company performance (EPS, ROE, stock price,
credit rating and image rating) when a company wins one or more Gold Star Awards for
Corporate Citizenship .
0 increases a company's ability to earn higher total profits.
() can lead to increased global sales volume and global market share of branded footwear
- when a company's advertising is devoted to explaining all of the socially responsible
activities being undertaken.
0 can enhance the power and effectiveness of a company's advertising expenditures in years
when its total annual spending for socially responsible activities is above the industry
average.
0 has a positive impact on a company's image rating, provided company spending on socially
responsible activities is a meaningful amount and is sustained over a multi-year period.
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Simulation Quiz 2

Year 12
Income Statement Data fin OOOsl
Net Revenues from Footwear Sales $580,000
Operating Profit {Loss) 80,000
Pre-tax Profit (loss) 60,000
Income Taxes 18,000
Net Profit (Loss\ $42,000
Based on the above income statement data and the formula for calculating the interest
coverage ratio presented in the Help section for p. 5 of the Footwear Industry Report, the
company's interest coverage ratio is
Q 29.0.
0 3.00.
0 4.00.
0 2.10.
0 2.20.
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Simulation Quiz 2
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to
a company's distribution warehouse in Europe-Africa is to
0 build a production faci lity in Europe-Africa and then expand it as may be needed so that the
company has sufficient capacity to supply all (or at least most) of the branded and private-
label pairs the company intends to try to sell in that geographic region.
() pursue a strategy of selling fewer pairs in Europe-Africa than rival companies--this has the
- advantage of keeping the company's costs for import tariffs in Europe-Africa lower than
those of rivals.
0 raise the company's selling price of footwear in Europe-Africa by the full amount of the tariff
and pass all tariff costs along to the purchasers of the company's footwear- -this strategy
has the advantage of completely eliminating the company's exposure to import tariffs in
Europe-Africa.
0 stop selling footwear in Europe-Africa and close down all company operations in that region.
0 pursue a strategy of selling footwear to retailers in Europe-Africa at a wholesale price of $39
per pair or less--no import tariffs have to be paid on branded pairs shipped to footwear
retailers in Europe-Africa when the wholesale price is below $40 per pair.
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Simulation Quiz 2
Which one of the following helps improve the S/Q rating of branded pairs produced at a
particular production location?
0 Increasing expenditures for TQM/Six Sigma programs

0 Avoiding competing for contracts to supply private-label footwear to chain retailers (because
winning such contracts damages the company's image as a producer of premium footwear)
() Increasing total worker compensation to levels above the industry average in regions where
- the company has production locations
0 Increasing the number of models/styles produced at the plant
O Avoiding the use of refurbished equipment
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Simulation Quiz 2
C
~
e
e
Given the following Year 12 balance sheet data for a footwear company: e
e
Balance Sheet Data e
Cash on Hand
Total Current Assets
$ 10,000
120,000
e
Total Fixed Assets 240,000 e
Total Assets $360,000 e
Accounts Payable $22,000 e
Overdraft Loan Payable 0 e
1-Year Bank Loan Payable
Current Portion of Long-Term Bank Loans
5,000
15,000
e
Total Current Liabilities 42,000 e
Long-Term Bank Loans Outstanding 108,000 e
Total Liabilities 150,000 e
Shareholder Equity:
Year 11 Year 12 e
Balance C hange e
Common Stock
Additional Capital
20,000
110,000
0
0
20,000
110,000
e
Retained Earnings 60,000 20,000 80,000 e
Total Shareholder Eq uity 190,000 +20,000 2 10,000 e
Total Liabilities and Shareholder Equitv $360,000
B,
Q ,
Based on the above figures and the definition of the debt-assets ratio presented in the Help
section for p. 5 of the Footwear Industry Report, the company's debt-assets ratio (rounded to 2
decimal places) is
Q 0.40.
0 o.ss.
Q 0.45.
Simulation Quiz 2
Which one of the following is the most effective means for a company to grow its wholesale
sales of branded footwear in the Latin America region?
0 Offer a mail-in rebate that is $1 higher than the industry average in Latin America
0 Provide footwear retailers in Latin America with an amount of merchandising and
promotional support that exceeds the industry average in Latin America
0 Market branded footwear to Latin American retailers that has an S/Q rating 1.5 stars higher
than the industry average S/Q rating in Latin America
() Charge footwear retailers in Latin America an average wholesale price for branded footwear
- that is below the average retail price the company charges individuals consumers to buy its
branded footwear online at the company's website in Latin America
() Spend an annual amount for search engine advertising that exceeds the industry average in
- Latin America by at least $1 million
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Simulation Quiz 2
Q1
< Previous Question 1 Next > 8
8
8
Based on the industry-low, industry-average, and industry-high values for the benchmarked data 8
on p. 7 of the FIR, which one of the following is the strongest and most valid signal that one or
more elements of a company's costs are too high relative to those of rival companies? 8
8
8
® The company's cost per pair sold in the private-label segment in the Asia-Pacific region were 8
close to the industry high 8
0 The company's marketing expenses per pair sold in the Internet segment of the Europe- 8
Africa region were above the industry average 8
0 The company's operating profit margin per pair sold in the Wholesale segment in the Latin 8
America region was midway betw~en the industry average and the industry hig1
O The compony'c coct of br.:mdcd poirc co ld in the k i~ P~cific re gion woe l~ c th~n $ 1.00
8
e;
below the industry average
o The company's distribution and warehouse costs per pair available in the Europe-Africa 8
region were S1.00 above the indu; try average 8
8
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Simulation Quiz 2
Q1
8
8
If a company is pursuing a strategy to differentiate its branded footwear from the offerings of 8
rival companies, its managers shoukl make a point of examininQ the plant and production cost
benchmarking statistics reported on p. 6 of each issue of the FIR ,n order to 8
8
8
0 discover which particular rival companies are overspending on production-related activities to 8
differentiate their branded footwear. 8
0 discern whether the company can boost profits by lowering the Internet and wholesale prices 8
being ch arged for branded footwear. 8
® determine whether immediate actions need to be taken to reduce one or more production 8
cost components at a particular plant--because the plant's manufacturing costs per pair
produced are unacceptably high r~lative to those at the plants of rival companies. 8
e;
0 learn how much manufacturing costs per pair produced can be lowered by investing in one or
more plant upgrade options. 8
0 learn whether its TQM/Six-Sigma expenditures, reject rates, and total compensation 8
packages for plant labor are comparable to other rival companies also pursuing a 8
differentiation strategy. 8
8
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Simulation Quiz 2
Q1
8
8
The industry-low, industry-average, and industry-high cost benchmarking data on p. 6 and p. 7 8
of each issue of the Footwear Industry Report
8
8
o are of little value to company managers in making decisions to improve company 8
performance in the upcoming de-: ision round, although they may certainly be of interest to 8
those managers who are curious about how their company fared on the various reported 8
benchmarks.
8
o have the greatest value to those company managers who are desperately sear,: hing for ideas 8
on what mey can do to improve their company's EPS and ROE.
o are of greatest value to the mo.n agers of companies looking for ways to increase their 8
company's market share of branded footwear sales in one or more geographic regions. 8
e;
0 are especially valuable to the managers of companies whose branded footwear has an S/ Q
rating of 7 stars or lower. 8
® aid managers in assessing whether their company's costs and/or operating profits for the 8
benchmarked ijems are adequately competitive-when such is not the case, 1he company's 8
managers should promptly address how best to correct the high-cost or low-profil problem(s). 8
8
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Simulation Quiz 2
Q1
8
8
The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to a 8
company's distribution warehouse in Europe-Africa is to
8
8
o simply stop selling footwear in Europe-Africa. 8
o lower the S/Q rating on all pairs sold in Europe-Africa to 2 stars or less--no tariffs have to be 8
paid on imported branded footwear having an S/Q rating of 2-stars or below. 8
® build a plant in Europe-Africa and then expand it as may be needed so that the company has 8
sufficient capacity to supply all (or at least most) of the branded and private- abel pairs the 8
company intends to try to sell in that geographic region. 8
0 pursue a strategy of selling fewer pairs in Europe-Africa than rival companies , which will then 8
k.~~µ lltt! c,;0111µcmy'::; c,;o::;l::; ru1 illlfJUI( lc:u iff::; in Eu1uµt!-Arlic;c:t IUWt!I l11e111 U1u::;e ur 1ivc1ll::i i:tlld e;
give the company a low tariff-cost advantage on ijs sales in Europe-Africa.
8
0 only sell the company's branded footwear at its Internet site for Europe-Africa; no import 8
tariffs have to be paid on Internet sales--import tariffs only have to be paid on footwear
shipped from the company's Eurooe-Africa warehouse to footwear retailers ,n Europe-Africa. 8
8
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Simulation Quiz 2
Q1
8
8
The benefits of pursuing a strategy of social responsibimy and corporate citizenship include 8
8
® the positive impact that such a strategy can have on the company's imaga rating if the 8
company spends a meaningful . mount on socially responsible activities over a multi-year 8
period. 8
o the boost such a strategy gives to increasing the company's global sales volume and global 8
market share of branded and private-label footwear. 8
o the boost such a strategy gives to the company's stock price. 8
o the enhanced profitability that results when a company opts to spend money on socially 8
responsible activities. 8
0 the positive impact that such a strategy has on the company's S/Q rating for branded e;
footwear. 8
8
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Simulation Quiz 2
Qu,
<Previous Question 7 Next> e <
e <
e <
Assume a company's Income Statement for Year 12 is as follows: e <
Year 12 e <
Income Statement Data tin OOOsl e <
Net Revenues from Footwear Sales S 560,000 e ~
Cost of Pairs Sold
Warehouse Expenses
340,000 e <
Marketing Expenses
45,000
85,000 e <
Administrative Expenses 15,000 e <
Operating Profit (Loss) 75,000 e <
Interest Income (Expense) (25,000) e <
Pre-tax Profit (Loss)
Income Taxes
50,000
15.000 e <
Net Profit (l oss) $ 35.000 e <
e <
e <
Based on the above income statemenl data and the formula for calculating the interest coverage
ratio presented on the Help section 'or p. 5 of the Footwear Industry Report, the company's
e <
interest coverage ratio is e <
e <
e <
O 2.00 .
B =A
O 4.00 . O= N
® 3.00 .
O 1.40.
o 22.4.
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Simulation Quiz 2
Qu,
e <
e <
Assume a company's Income Statement for Year 12 is as follows: e <
Year 12 e <
Income Statement Data tin OOOsl e <
Net Revenues from Footwear Sales
Cost of Pairs Sold
S 530,000 e <
Warehouse Expenses
340,000
e ~
Marketing Expenses
40,000
80,000 e <
Administrative Expenses 15,000 e <
Operating Profit (Loss) 55,000 e <
Interest Income (Expense) (10,000) e <
Pre-tax Profit (Loss)
Income Taxes
45,000
13.500 e <
Net Profit (l oss) $ 31.500 e <
e <
e <
Based on the above income statemenl data and assuming the company has 20 milion shares of
common stock outstanding, the company's operating profit margin and EPS were
e <
e <
e <
o 5.94% and $1.55. e <
o 6.67% and $1.84. B =A
o 10.4% and $2.75. O =N
o 8.49% and $2.25.

® 10.38% and $1.55.
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Simulation Quiz 2
Q1
8
8
Which one of the following is the most effective means for a company to grow its wholesale 8
sales of branded footwear ,n the Latin America region?
8
8
o Ch arge footwear retailers in Latin America an average wholesale price for branded footwear 8
that is below the average retail p·ice the company char~es individuals consumers to buy its 8
branded footwear online at the company's website in Latin America 8
0 Provide footwear retailers in Latin America with an amount of merchandising and promotional 8
support that exceeds the indust,y average in Latin America 8
0 Offer a mail-in rebate that is $1 higher than the indust,y average in Latin America 8
0 Spend an annual amount for search engine advertising that exceeds the indust,y average in 8
Lctti11 A1m:~1ic.;ct Uy c:tl l~ct::51$ 1 million e;
® Market branded footwear to Latin American retailers that has an S/Q rating 1.5 stars higher 8
than the indust,y average S/Q ratilg in Latin America 8
8
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8
8
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Simulation Quiz 2
Q1
8
8
If a company wants to enhance the profit ability of differentiating its branded product offering 8
from rivals by offering buyers 500 models/styles to choose from in all four regions, then it shoula
consider reducing the S15 million annual costs for production run setup costs associated with 8
producing 500 models/styles at each of its production facilities by 8
8
8
® instituting production improvement option B at each of its production facilities. 8
o instituting production improvement option C at each of its production facilities. 8
o offsetting some of the S15 million annual charge for production run setup costs for 500 8
models by trimming expenditures for TOM/Six Sigma programs at each production facility 8
and also reducing t~e percentage use of superior materi als at each production facility. 8
o building production tacilities in all tour geographic regions and producing oUU models/styl es e;
at eac~ of these facilities. 8
o reducing expend~ures per model for enhanced styling/f eatures at each production facility by 8
an amount sufficient to cover the resulting $15 million annual ch arge for production run setup 8
costs for 500 models.
8
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8
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Simulation Quiz 2
Q1
< Previous Q uestion 11 Next > 8
8
8
In the private-label operating benchnarks section on p. 7 of each issue of the FIR, the industry- 8
low, industry-average, and industry-high benchmarks for the margins over direct costs (as
explained in the Herp section for this same page) should be interpret ed as representing 8
8
8
0 the net profit earned on each pair of private-label footwear sold in a given regio,. 8
0 how much sellers of private-label footwear received per pair sold over and above materials 8
costs and direct labor costs. 8
® how much in dollars and cents was earned (or lost) on each pair of private~abel footwear 8
sold to chain retailers; progressively higher direct margins signal greater contributions to (a) 8
helping pay any portion of branded expenses not covered by branded revenues in a given 8
region and (2) boosting the company's operating profits in the region. e;
o how much sellers of private-l abel footwear received from each private-label p3ir sold that is
8
available for repaying bank loans.
o how much sellers of private-label footwear received from each pair sold that can be
8
immediately used for purchasing shares of outstanding common stock. 8
8
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Simulation Quiz 2
Qu,
e <
e <
Given the following Year 12 balance sheet data for a footv,ear company: e <
Balance Sheet Data e <
Cash on Hand S 15,000 e <
Total Current Assets 130,000 e <
Total Fixed Assets
Total Assets
290,000 e <
Accounts Payable
$420,000
$ 20,000 e <
Overdraft Loan Payable 0 e <
1-Year Bank Loan Payable 5,000 e <
Current Portion oi Long-Term Bani: Loans
Total Current liabilities
22,000
47,000
e <
LonQ-Term Bank Loans OutstandinQ 153.000 e ~
Total liabilities 200,000 e <
Shareholder Equity: Year 11 Year 12 e <
Balance Change e <
Common Stock
Additional Capital
20,000
120,000
0 20,000
120,000
e <
Retained Earnings 60,000
0
20,000 80,000 e <
Total Shareholder Equity 200,000 +20,000 220,000 e <
Total liabilities and Shareholder Eauitv $420.000 e <
B =A
Based on the above figures and the definition of the debt-assets ratio presented in the Help O= N
section for p. 5 of the Footwear Industry Report, the company's debt-assets ratio ~ounded to 2
decimal places) is
® 0.48.
o 0.40.
o 0.46.
o 0.45.
o 0.42.
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Simulation Quiz 2
Q1
8
8
Which one of the followin~ is NOT a way to improve the S/0 rating of branded pairs produced at 8
a particular production facility?
8
8
o Increasing incentive pay per non-def ective pair produced 8
o Increasing expenditures for TOM/Six Sigma programs 8
8
o Increasing Best Practices Training expenditures per worker 8
® Increasing expenditures for fringe benefit packages for production workers 8
o Increasing the percentage use of superior materi als 8
8
e;
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8
8
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Simulation Quiz 2
Qu,
<Previous Question 16 Next > e <
e <
e <
Given the following data from a Comparative Compemive Efforts page in the CIR: e <
Your Industry Your Company e <
WHOLESALE SEGMENT Comoanv Averaae vs. Ind . Ava. e <
Wholesale Price (S per pair) $58.75 S53.83 +9.1% e <
S/Q Rating (1 to 10 stars)
Model Availability
8.3 6.3 +31.70/0
-16.7%
e <
Brand Advertising (SOOOs)
250
16,500
300
14,350 +15.03/0 e <
Rebate Offer ($ per pair) 3.00 3.40 -11.8% e <
Delivery Time (weeks) 2 wks 2.8 Wl<s -28.6% e <
Retailer Support (Sper outlet) 4,500 4,675 -3.7% e <
Retail Outlets
Celebrity Aooeal
1,698
60
1,538
111
+10.4%
-45.9% e <
Brand Reputation (prior-year averege) 87 79 +10.1% e <
Pairs Demanded 2,198 2,413 +29.7% e <
Gained/Lost {due to stockouts) +9 0 e ~
Pairs Sold (OOOs)
Market Share /%)
2,207
9.1%
2,413
10.0%
-8.5%
-0.9 cts
e <
e <
e <
Based on the above data for your company, which of the following statements is false? e <
B =A
o Your company's branded sales volume and market share in the Wholesale segment were O= N
negatively impacted by your company's competitive effort in model availability and
company s low celebrity appeal rating, low brand reputation, and small number o retail
your br
outlets stocking your company's brand.
o Your company's pairs sold were 9,000 pairs higher than they would otheiwise have been
because other companies in the region did not have sufficient inventory to fill all orders from
retailers, thus causing some retailers to place orders with your company.
® Your company's branded sales volume and market share in the Wholesale segment were
positively impacted by your company's small percentage competitive advanta•Jes in brand
reputation and wholesale price.
o Your company's biggest percentage competitive disadvantage in the Wholesale Segment
related to celebrity appeal.
o Your company had a competitive advantage in expenditures for retailer support.

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Simulation Quiz 2
Qu ,
e <
e <
Given the following data from a recent Comp arative Comp etitive Efforts page in th e CIR: e <
Your Industry Your Company e <
INTERNET SEGMENT Comoonv Averaae vs. Ind. Ava. e <
Retail Price ($ per pair) S63.00 S76.28 -17.4% e <
Search Engine Advertising ($000s) 5,000 6,225 -19.7% e <
Free Shipping
S/Q Rating
No
4.3
None
6.3
Same
-31.7% e <
Model Availabilily 400 300 • 33.3% e <
Brand Advertising 12,000 14,350 -16.4% e <
Celebrity Appeal 0 111 -100.0% e <
Brand Reputation
Online Orders (000s)
80
598
76
538
• 5.3%
• 11.2%
e <
Pairs Sold (OOOs) 598 538 • 11.2% e <
Market Share 1%\ 11.1% 10.0% • 11.2% e <
e <
e~
Based on the above data for your company, which o f th e following statements is false?
e <
e <
® Your company's most P-owerful competitive disadvantage in Internet segment related to the
fact that your company s retail price was 17.4% below the industry average.
e <
B =A
o Your company's percentage competitive advantages and disadvantages on the 8 competitive O= N
factors affecting Internet sales and market sh are resulted in a net overall comp etitive
advantage of a size sufficient to produce an 11.1% market share for your company, which
was above the 10.0% average market sh are for th e region.
o Your company's branded sales volume and market share in the Internet segment were
n egatively imp acted by your company's competitive effort in search engine ad·,ertising and
brand advertising.
o Your comp any's branded sales volume and market share in the Internet segment were
positively impacted by your company's bran d reputation.
o Your company's biggest percentage competitive advantage In the Internet Segment related to
model availability.
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Simulation Quiz 2
Q1
8
8
Under what circumstances should a company's management team give serious consi deration to 8
making price offers to supply private,label footwear to chain retailers in one or more regions?
8
8
® When company managers conclude that the company has more than enou9h production 8
capacity to produce the needed pairs of branded footwear and, based on their projections, 8
determine that the company's profitability can be enhanced by making price offers to chain 8
retailers and winning contracts to supply them with private-label footwear
8
o When the benchmarking data at the bottom of p. 7 of the latest FIR indicates that all sellers of 8
private label footwear in that geographic region had a margin over direct costs of more than
$2.50 per pair of private-label footwear sold to chain retailers 8
o When the company's market share for branded footwear in a geographic region is below the 8
industry average and all the sellers of private-l abel footwear in the prior year made money on e;
their private-label contracts 8
0 When the data in the latest Comoetitive Intelligence Report indicates that all of the winning 8
bidders for P-L contracts sold more than 500,000 pairs of P-l shoes 8
0 When chain retailers want to purchase private-l abel footwear with an S/Q rating that is 2- 8
stars or more below last year's indust,y average for branded footwear 8
8
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Simulation Quiz 2
Q1
8
8
Managerial efforts to boost a company's stock price should entail such actions as 8
8
0 paying off all lon~-term debt as rapidly as possible, keeping the company's dividend payout 8
ratio oetween 25 Yo and 50%, spending additional money on corporate citizen£hip and social 8
responsibility, and maintaining a credit rating that is no less than B+. 8
o increasing the company's dividends each year (by at least $0.10 and prefe·ably $0.25 or 8
more for the increase to have much impact on the stock price), keeping the company's credit 8
rating at A (or above), spending sufficient money on corporate citizenship and social 8
responsibility to earn an Award for Exemplary Corporate Citizenship, and issuing a sufficient
number of shares of common stock to pay off all long-term debt within 1-2 y ears. 8
@ raising the company's dividend each year(by at least $0.10 and preferably $0.25 or more for
8
the increase to have much impact on the stock price) and repurchasing shar~s of common e;
stock. 8
0 spending amounts on corporate citizenship and soci al responsibility that are above the 8
industry average, boosting the company's dividend payout ratio to more than 100%, and 8
paying off all long-term deot within 2 y ears. 8
o charging a price for branded footwear that is below the industry average in all geographic 8
regions, spending amounts on corporate citizenship and social responsibility that are below
the industry average, keeping the company's image rating above 70, paying a dividend each 8
year that equals projected EPS, and repurchasing shares of common stock. B=
O=
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Assume a company's Income Statement for Year 12 Is as follows:
Year 12
Income Statement Data (In OOOsl
Operating Profit (Loss) 75,000
Income Taxes 15,000
Net Profit ILossl $ 35.000
Based on the above Income statement data and the formula for calculating the Interest
coverage ratio presented on the Help section for p. 5 of the Footwear Industry Report, the
company's interest coverage ratio Is
22.4.
1.40.
2.00.
4.00.
O 3.00.
Which of the following are effective ways to try to boost a company's stock price?
Pay off all long -term debt as rapidly as possible, strive to achieve a credit rating of at least
an A, and try to boost the company's Image rating above 75
Increase the company's retained earnings each year, boost spending for corporate
citizenship and social responsibility, pay a dividend each year that equals projected EPS.
and offer a wider variety of models/styles of branded footwear
Strive to increase earnings per share, boost the company's dividend payout ratio to more
than 100%, and Increase the company's retained earnings
Strive to achieve an ROE above 20%, quickly pay off all long-term debt (preferably by
issuing additional shares of common stock and using the proceeds to pay off loans), and
keep the company's dividend payout ratio below 50%
O Strive to increase earnings per share each year by amounts that meet or beat investor
expectations, raise the company's dividend each year (by at least $0.10 and preferably
$0.25 or more for the increase to have much impact on the stock price), and repurchase
shares of common stock
The benefits of pursuing a strategy of social responsibility and corporate citizenship include
the enhanced profitability that results when a company opts to spend money on socially
responsible activities.
O the positive impact that such a strategy can have on the company's Image rating if the
company spends a meaningful amount on socially responsible activities over a multi -year
period.
the positive Impact that such a strategy has on the company's S/Q rating for branded
footwear.
the boost such a strategy gives to the company's stock price.
the boost such a strategy gives to increasing the company's global sales volume and global
market share of branded and private-label footwear.
If a company spends $28.8 million to install refurbished footwear-making equipment with

capacity to produce 2 mUlion pairs of athletic footwear at its Asia Pacific production facility,
then its annual depreciation coots at that facility will rise b"f
8% or $2,304,000.
O 10% or $2,880,000.
4% or $1,152,000.
5% or $1,440,000.
2.5% or $720,000.
Which of the following results from the latest decision round Is most helpful In guiding the
efforts of company managers to lmpr011e the r company's costs and profitability In the
upcoming decision round?
The facility space and production equipment data at the bottom of page 4 of the FIR
The data on materials prices at the top of p. 4 of the AR
The comparative financial data on p. 5 of the FIR
O The benchmarking data on pp. 6 and 7 of the FIR
The celebr,ty endorsement data and the 4 graphs showing branded prices and S/Q rating
trends In each of the four geographic regions on p. 8 of the F R.
Which of the following statements about striving to reduce labor costs per pair produced at
each of the company's production facilities is true?
The most effective way for a company to achieve labor costs per pair produced that are
below the industry average is to give workers large increases in base pay (above 10%)
annually and to keep Incentive pay below $0.75 per non-defective pair produced.
O Company managers each year should seek to search out a combination of base pay
increases, incentive pay per non-defective pair produced, total compensation, and
expenditures for best practices training at each production facility that Is projected to yield
the lowest feasible labor cost per pair produced.
As long as labor productivity at a company's production facility is in the range of 3,400 to
3,600 pairs produced per worker, then labor costs per pair produced at that facility will
closely match the labor costs per pair produced of other companies having production
facilities In that same region.
Companies producing branded footwear with a 7-star or higher S/Q rating are very unlikely
to achieve labor costs per pair produced that are below the industry average in a g iven
region whereas companies producing branded footwear with an S/Q rating no higher than
4-stars or less in that sarme geographic region are virtually assured of having labor costs per
pair that are below the region's industry average.
The easiest way for a company to achieve low labor costs per pair produced is make sure
that all of its production facilities are equipped with new footwear-making equipment rather
than refurbished equipment.
Given the following data from a recent Comparative Competitive Efforts page in the CIR:
Your Industry Your Company
INTERNET SEGMENT Comn."'nv Averaae vs. Ind. Ava.
Retail Price {$ per pair) $83.50 $76.28 +9.5%
Search Engine Advertising ($000s) 6,250 6,225 +0.4%
Free Shipping No None Same
S/Q Rating 8.6 6.3 +36.5%
Model Availability 499 300 +66.5%
Brand Advertising 16,500 14,350 +15.0%
Celebrity Appeal 140 111 +26.1%
Brand Reputation 87 76 +14.5%
Online Orders (OOOs) 709 538 +31 .8%
Pairs Sold {OOOs) 709 538 +31.8%
Market Share 1%1 13.2% 10.0% 13.2%
Based on the above data for your company, which of the following statements Is false?
Your company's percentage competitive advantages and disadvantages on the 8

competitive factors affecting Internet sales and market share resulted in a net overall
competitive advantage of a size sufficient to produce an above-average 13.2% market
share.
Your company had a tiny competitive advantage in search engine advertising.
Your company's two biggest competitive advantages in the Internet Segment related to S/0
rating and model availability.
O Your company had a competitive advantage on each one of the eight competitive factors
affecting Internet sales and market share.
Your company's branded sales volume and market share in the Internet segment was
positively impacted by your company's brand reputation.
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Which one of the following is the most effective means for a company to grow its wholesale
sales of branded footwear in the Latin America region?
Provide footwear retailers in Latin America with an amount of merchandising and

promotional support that exceeds the industry average in Latin America
Offer a mail-in rebate that is $1 higher than the industry average in Latin America
O Market branded footwear to Latin American retailers that has an S/Q rating 1.5 stars higher
than the Industry average S/Q rating In Latin America
Spend an annual amount for search engine advertising that exceeds the Industry average in
Latin America by at least $1 million
Charge footwear retailers In Latin America an average wholesale price for branded footwear
that Is below the average retail price the company charges individuals consumers to buy its
branded footwear online at the company's website in Latin America
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The most attractive way to reduce or eliminate the impact of paying tariffs on pairs imported to
a company's distribution warehouse in Europe-Africa is to
raise the company's selling price of footwear in Europe-Africa by the full amount of the tariff
and pass all tariff costs along to the purchasers of the company's footwear--this strategy
has the advantage of completely eliminating the company's exposure to Import tariffs In
Europe-Africa.
pursue a strategy of selling fewer pairs in Europe-Africa than rival companies--this has the
advantage of keeping the company's costs for import tariffs In Europe-Africa lower than
those of rivals.
O build a production facility In Europe-Africa and then expand it as may be needed so that the
company has sufficient capacity to supply all (or at least most) of the branded and private-
label pairs the company Intends to try to sell In that geographic region.
pursue a strategy of selling footwear to retailers in Europe-Africa at a wholesale price of $39
per pair or less--no import tariffs have to be paid on branded pairs shipped to footwear
retailers in Europe-Africa when the wholesale price is below $40 per pair.
stop selling footwear in Europe-Africa and close down all company operations in that region.
Which one of the following helps Increase tho S/0 rating of branded pairs produced at e
pertlculer production location?
Maximizing the use of overtime et each production location

Increasing efforts to Improve the productivity of production workers
O Increasing expenditures for enhanced styling/features
Increasing the Incentive pay for production workers, and thereby reduce reject rates on pairs
produced
Avoiding bidding for contracts to supply private-label footwear to chain retailers, Which
damages tho company's Image as a producer of top quahty footwear
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Year 12
Income Statement Data lin OOOsl
Operating Prom (Loss) 75,000
Income Taxes 15,000
Net Profit (Loss) $ 35,000
Based on the above Income statement data and assuming the company has 20 million shares
of common st ock outstanding, the company's operating profit margin and EPS were
15.7% and $2.25.

13.39% and $3.75.
13.79% and $2.59.
O 13.39% and $1 .75.
10.38% and $1 .75.
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The industry-low, industry-average, and industry-high benchmarks on p. 7 of each issue of the
Footwear Industry Report
are of greatest value to the managers of companies whose branded cost benchmarks and
operating profit benchmarks are below the Industry average.
O are worth careful scrutiny by the managers of all companies because when a company's
costs or operating profits for one or more of the benchmarks are deemed too far out-of-line,
managers should consider initiating corrective actions in the next decision round .
are of little value to company managers In making decisions to Improve company
performance In the upcoming decision round, although they may have interest to managers
who are curious about how their company's prior-year outcomes compared to the various
benchmarks on p.7.
are of little value to the managers of companies whose branded cost and operating profit
outcomes In the prior year were below the Industry-average benchmarks.
are only of value to the managers of companies whose operating profits per branded pair
sold in the prior-year were negative in one or more geographic regions.
Given the following data from a Comparative Competitive Efforts page in the CIR:
Your Industry Your Company
WHOLESALE SEGMENT Comru1nv AveraQe vs. Ind. Ava.
Wholesale Price (S per pai~ S43.50 $53.83 -19.2%
S/0 Rating (1 to 1Ostars} 4.3 6.3 -31.7%
Model Availability 400 300 +33.3%
Brand Advertising ($000s) 12,000 14,350 ·16.4%
Rebate Offer ($ per pair} 0 3.40 ·100.0%
Delivery Time (weeks) 3wks 2.8 wl<s +7.1 %
Retailer Support ($ per outlet) 4,500 4,675 -3.7%
Retail Outlets 770 1,538 ·49.9%
Celebrity Appeal 0 111 ·100.0%
Brand Reputation (prior-year average) 80 76 +5.3%
Pairs Demanded 2,365 2.413 •2.0%
Galnod/Lost (due to stockouts) .7 0
Pairs Sold (OOOs) 2.358 2.413 •2.3%
Morl<et Share 1%) 9.8% 10.0% ·0.2 DtS
Based on the above data for your company, which of the following statem\!nts Is false?
Your company's two biggest competitive advantages in the Wholesale Segment related to
wholesale price and model availability.
Your company's percentage competitive advantages and d isadvantages on the 10
competttive factors affecting Wholesale sales and market share resulted in a net overall
competitive disadvantage of a size that resulted in a below-average 9.8% market share.
Your company's branded sales volume and market share in the Wholesale segment was
negatively Impacted by your company's S/Q rating, brand advertising, celebrity appeal, and
lack of a rebate offer.
Your company had a small competitive d isadvantage in expenditures for retailer support.
O Your company's branded sales volume and market share in the Wholesale segment was
positively Impacted by your company's delivery time.
Given the following Year 12 balance sheet data for a footwear company:
Balance Sheet Data
Cashon Hand $10,000
Total Current Assets 120,000
Total Rxed Assets 240,000
Total Assets $360,000
Accounts Payable $ 22.000
Overdraft Loan Payable 0
1-Year Bank Loan Payable 5,000
Current Portion of Long-Term Bank Loans 15,000
Total Current Llabllitles 42,000
Long-Term Bank Loans Outstanding 108,000
Total Uabilnies 150,000
Year 11 Year 12
Shareholder Equity:
Balance Change
Common Stock 20,000 0 20,000
Addrtional Capital 110,000 0 110,000
Retained Earnings 60,000 20,000 80,000
Total Shareholde, Equay 190,000 +20.000 210,000
Total Uabilnies and Shareholder Eaui"' $360000
Based on the above figures and the definition of the debt- assets ratio presented in the Help
section for p. 5 of the Footwear Industry Report, the company's debt-assets ratio (round ed to 2
decimal places) is
0.40.
0.46.
0.33.
0 0.42.
0.45.
In the private-label operating benchmarks section on p. 7 of each Issue of the FIR, the Industry-
low, Industry-average, and industry-high benchmarks for the margins over direct costs (as
explained In the Help section for this same page) should be Interpreted as representing
how much sellers of private-label footwear received per pair that help cover the seller's
corporate overhead and help lower the seller's debt-to-assets ratio.
how much sellers received on each pair of private-label footwear supplied to chain retailers
over and above direct materials and labor costs--these dollars represent free cash flow that
company managers can use for whatever purpose they see flt.
O how much sellers of private-label footwear received over and above the costs per pair sold;
these margins, if positive, serve to Improve a seller's operating profit In the designated
region.
how much sellers of private-label footwear received per pair that were over and above
materials costs and direct labor costs--these dollars are automatically deposited In the
seller's retained earnings account and help boost the seller's ROE and stock price.
the net profit earned (or lost •• In the case of a negative number) on each pair of private-label
footwear supplied to a given region's chain retailers.
Which one of the following actions is certain to result in higher production costs per branded
pair at one of your company's production facilities?
O Increasing the use of superior materials from 30% to 40%

Increased spending for best practices training
Reducing the number of branded models/styles produced from 400 to 200
Installing production improvement option D
Increased expenditures for TOM/Six Sigma quality control
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