1. Review the Inquirer to determine Digby’s current strategy. How will they seek a competitive advantage? From the following list, select the top five sources of competitive advantage that Digby would be most likely to pursue.

Select: 5

Seek high automation levels

Seek the lowest price in their target market while maintaining a competitive contribution margin

Seek excellent product designs, high awareness, and high accessibility

Accept lower plant utilization and higher capacities to insure sufficient capacity is available to meet demand

Increase demand through TQM initiatives

Seek high plant utilization, even if it risks occasional small stockouts

Reduce cost of goods through TQM initiatives

Add additional products

Offer attractive credit terms

Reduce labor costs through training and recruitment

2. Rank the following companies from high to low cumulative profit, (in descending order, 1=highest, 4=lowest).

Rank in order from 1 to 4

Digby

Andrews

Baldwin

Chester

3. Which description best fits Baldwin in your industry? For clarity:

 

– A differentiator competes through good designs, high awareness, and easy accessibility.

– A cost leader competes on price by reducing costs and passing the savings to customers.

– A broad player competes in all parts of the market.

– A niche player competes in selected parts of the market.

 

Which of these four statements best describes this competitor?

Select: 1

Baldwin is a niche cost leader

Baldwin is a broad differentiator

Baldwin is a broad cost leader

Baldwin is a niche differentiator

4. If Baldwin issued 1000 shares of common stock at last year’s end price, the effect on the balance sheet would be:

Select: 1

Retained earnings would increase by $4,413

Retained earnings would increase by $44,128

Equity would decrease by $4,413

Equity would increase by $44,128

5. The Baldwin Company has just purchased $40,900,000 of plant and equipment that has an estimated useful life of 15 years. The expected salvage value at the end of 15 years is $4,090,000. What will the depreciation expense for this purchase (exclude all other plant and equipment) be after its second year of use? (Use FASB GAAP)

Select: 1

$4,908,000

$5,453,333

$2,454,000

$2,726,667

6. What is the Quick Ratio of Chester?

Select: 1

2.01

.50

1.46

.69

7. Chester has a ROA of 0.13 (ROA = Net income/Total Assets). That means:

Select: 1

Every dollar of Chester’s assets result in earnings of $0.13.

Chester uses $0.87 of each dollar earned to purchase assets.

Chester uses $0.13 of each dollar earned to purchase assets.

Every dollar of Chester’s assets result in earnings of $0.87.

8. Midyear on July 31st, the Digby Corporation’s balance sheet reported:

Total Liabilities of $25.571 million

Cash of $2.010 million

Total Assets of $41.126 million

Total Common Stock of $1.270 million.

What were the Digby Corporation’s retained earnings?

Select: 1

$16.295 million

$16.825 million

$18.835 million

$14.285 million

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