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General Aviation Marketing And Management 1st Edition Bruce D. Wells, Alexander T.; Chadbourne - Solutions
List the six steps in the problem-solving process.a.b.c.d.e.f.
Assume that you are managing an FBO during the 1990s. What is your prescription for survival?
Why is it so common that an owner/manager of a small FBO will thoroughly plan a cross-country flight, but when it comes to business planning, very little time or thought is put into the process?
Is leadership an innate ability or can it be learned?
Herzberg maintained that certain factors influence job satisfaction and performance. Give some examples of how these factors apply to flight instructors, maintenance technicians, and office personnel at an FBO.
Why is doing nothing an alternative in the problem-solving process? Can doing nothing be a viable solution?
Financial planning affects thea. number and type of aircraft an FBO can afford to buy.b. services provided.c. profitability of the firm.d. all of the above.
A financial management system enables a firm to do all of the following excepta. interpret past performance.b. make a profit.c. make decisions.d. uncover significant trends.
The provides a picture of the financial health of a business at a given moment, usually at the close of an accounting period.a. shareholders' equityc. Balance Sheetb. Statement of Incomed. net worth
The most liquid asset is:a. accounts receivable.c. land.b. inventories.d. none of the above.
Current assets include all of the following excepta. government securities.c. accrued expenses.b. prepaid expenses.d. accounts receivable.
Equipment loans area. current assets.c. current liabilities.b. fixed assets.d. long-term liabilities.
The Statement of Income:a. measures a company's sales and expenses over a specific period of time.b. is the assets of the firm minus its liabilities.c. is the gross profit of the business less cost of goods.d. measures current assets over a specific period of time.
Balance Sheet ratios measurea. a firm's profitability.b. return on assets.c. liquidity, solvency, and leverage.d. return on investment.
All of the following are liquidity ratios excepta. current ratio.c. quick ratio.b. gross margin ratio.d. working capital.
If a business's current ratio is too low, it may be able to raise it bya. paying some debts.b. converting current assets into noncurrent assets.c. increasing short-term borrowing.d. none of the above.
Working capitala. indicates the extent to which the firm is reliant on debt financing.b. is a measure of cash flow.c. measures how efficiently profits are being generated.d. is the percentage of sales dollars (gross income) left after subtracting the cost of goods sold.
The percentage of sales dollars left after subtracting the cost of goods sold from income is thea. net profit margin ratio.c. return on assets ratio.b. gross margin ratio.d. leverage ratio.
The return on assets ratio measures thea. percentage of return on funds invested in the business by its owners.b. percentage of sales dollars (gross income) left after subtracting the cost of goods sold and all expenses, except income taxes.c. efficiency of profits generated from the assets
The return on investment is calculated as follows:a. Net Profit Before Taxc. Net Profit Before Tax b Net Profit Before Tax Total Assets d Gross Profit Income
Income (Sales) minus cost of sales equalsa. net profit.b. gross profit.c. net income.d. gross return after costs.
Aircraft lease payments would be an example of a (an)a. direct fixed cost.b. direct variable cost.c. overhead cost.d. indirect operating expense.
All of the following are accepted methods of allocating indirect expenses to a particular department excepta. square footage basis.b. percentage of sales.c. number of employees.d. no exceptions; all of the above are accepted methods.
Under break-even analysis, volume and cost estimates assumea. a change in sales volume will have no effect on selling price.b. fixed expenses will remain the same at all volume levels.c. variable expenses will increase or decrease in direct proportion to any increase or decrease in sales volume.d.
Which of the following statements concerning cash flow budgets is not correct?a. The cash flow budget only deals with actual cash transactions.b. Cash flow budgets can be established for sales, cost of goods sold, selling expenses, and so forth.c. Cash flow budgets have little effect on a
is required to meet operational needs of a firm such as purchasing inventory or meeting the payroll.a. equity capitalc. growth capitalb. working capitald. operating capital
Growth capitala. is required to meet the operational needs of a business.b. is directly related to the cyclical aspects of the industry or economy.c. would be needed to build twenty new "T" hangars.d. would be needed to increase parts inventory during the busy season.
Equity capital can be obtained froma. venture capitalists.c. banks.b. leasing companies.d. mortgage companies.
Debt capital can be obtained froma. venture capitalists.b. nonprofessional investors.c. leasing companies.d. Small Business Investment Companies (SBIC's).
Which of the following statements is not correct?a. Lenders of growth capital depend on anticipated profitability for repayment over an extended period of time.b. Every business needs equity, working and growth capital.c. Equity capital is generally repaid within one year.d. Debt capital is
The largest source of working capital loans area. savings and loan associations.c. investment banks.b. commercial banks.d. credit unions.
Lenders and investors will distinguish between the three types of capital, (1) working, (2) growth, and (3) equity in the following way:a. fluctuating needs— (1) and (2) only.b. needs to be repaid with profits over a period of years—(1), (2), and (3).c. permanent needs—(3) only.d. limited
Working capital loans have the following characteristics:a. They are short term but renewable.b. They may fluctuate according to seasonal needs or follow a fixed schedule of repayment (amortization).c. They are granted primarily only when the ratio of net current assets exceeds net current
Most banks will require a firm to pay off working capital loansa. within 30 or 60 days.c. within 180 days.b. within one year.d. within five years.
Ownership of the property is retained by the seller until the buyer has made all the payments required by the contract under aa. venture capital loan.b. conditional sales purchase.c. working capital loan.d. none of the above.
In acquiring an aircraft there are usually tax advantagesa. by leasing.b. under a conditional sales purchase.c. by paying cash.d. under a venture capital arrangement.
When an FBO goes to a bank to request a loan, it should bring its financial plan includinga. cash budget for the next twelve months.b. pro forma balance sheets.c. income statements.d. all of the above.
Venture capitala. comes from sources other than the business owner/manager or stockholders.b. requires a substantial down payment and security in the form of capital assets.c. is often provided with the stipulation that the investor take an active role in the management of the company.d. a and c
A firm's short-term financial planninga. is generally concerned with profit planning or budgeting.b. focuses on pro forma statements of income prepared for annual periods up to three years.c. involves capital funding projects presently under way.d. is concerned with short-term borrowing primarily
A financial management system enables a firm to compare results with similar firms and within the particular industry.T F
Assets are funds acquired for a business through loans or the sale of property or services to the business on credit.T F
Fixed assets are typically not for resale and are recorded in the balance sheet at their net cost less accumulated depreciation.T F
Exclusive-use contracts are considered to be a current asset because their termination could be at any time.T F
Notes payable to banks would be considered a long-term liability.T F
Net worth equals the owner's equity.T F
Gross profit equals income less operating expenses.T F
The Statement of Income is also called the P and L Statement.T F
Ratio analysis enables management to spot trends in a business and to compare its performance and condition with the average performance of similar businesses in the industry.T F
Liquidity ratios measure profitability or unprofitability of a firm.T F
A firm may raise its current ratio by increasing the current assets from new equity contributions.T F
The quick ratio is a much more exacting measure than current ratio.T F
The percentage of sales dollars (gross income) left after subtracting the cost of goods sold and all expenses, except income taxes is called gross margin ratio.T F
Management ratios are derived from the Balance Sheet and Statement of Income.TF
Pro forma income statements are forecasts. T F
Expenses should be departmentalized whenever possible. T F
Taxes, rent, advertising, office supplies, and professional services would be considered direct fixed ex- penses. TF
Overhead (indirect) expenses are often allocated to a particular department based on a percentage of sales for that profit center. T F
The pro forma statement of income is generally prepared on a weekly basis. T F
Total expenses are subtracted from gross profit to determine net profit. T F
Break-even analysis means a level of operations at which revenue is just enough to cover expenses. T F
The cash flow budget enables management to plan for shortfalls in cash resources so short-term work- ing capital loans may be arranged in advance. T F
One source of debt capital is venture capitalists. TF
Equity capital remains in the company for the life of the business. T F
Working capital is required to meet operational needs such as an inventory buildup. T F
If a firm is seeking equity capital, management will have to demonstrate how the equity will be repaid. T F
Working capital loans are always secured by capital assets. T F
Banks only grant unsecured credit when they feel the general liquidity and overall financial strength of a business provide assurance for repayment of the loan.T F
The difficulty in paying off a working capital loan often occurs because the firm is growing and its cur- rent activity represents a considerable increase over the corresponding period of the previous year. T F
For a growth capital loan, management must demonstrate that the growth capital will be used to in- crease the cash flow through increased sales, cost savings, and/or more productivity. T F
Long-term capital loans generally do not exceed five years. T F
Venture capitalists often take an active role in the management for the firm. TF
Poor management of the firm is often the result of lack of financing. T F
Planning generally comes easy to FBO managers because they are experienced in dealing with FAA requirements. T F
Businesses often grow too rapidly for internally generated cash to sufficiently support the growth. T F
Why are so many small FBO managers adverse to financial planning and management?
Ratio analysis can be used to compare a firm over a period of several years or with its competitors' performance.When might one approach be better than the other?
Discuss the various methods of allocating overhead expenses. Under what circumstances would one method be better than another? Put yourself in the position of a department manager supporting one method over another.
How should a department operating and capital budget be established? Should budgets be amended when the forecasts upon which they were made also change?
Why is good banking relationships so important? When might it be appropriate to seek venture capital?
Marketinga. strictly includes selling and promotion.J&\ is concerned with how society uses its limited resources to satisfy unlimited wants.(fcJincludes those business activities which direct the flow of products and services from seller to buyer in^-"order to satisfy customers' needs and
Accomplishing a company's objectives meansa. earning a reasonable profit.b. increasing market share.c. broadening the product line.d. all of these.
The marketing management process includes all of the following excepta. planning.c. implementation.b. competition.d. control.
A firm's "marketing mix" would not includea. place.b. promotion.c. product.
The first step in market segmentation is identifyinga. all of the possible market segments.b. all needs for the possible market segments.potential customers,e. price.c. the product-service areas to be segmented.d. a marketing mix for each segment.
The three-step approach to segmenting marketsa. applies to both individuals and businesses.b. minimizes the need for management judgment and intuition.c. requires extensive market research and computer analysis.d. none of these.
After markets have been segmented, the next step includesa. establishing target markets.c. establishing a marketing mix.b. determining objectives.d. organizing for implementation.
Marketing objectivesa. may be quite different from a firm's overall objectives.b. should be quantifiable if possible.c. include establishing a marketing mix.d. are normally established by top management without consultation of the sales force.
A "marketing mix" includesa. the customer and the "four Ps."b. all controllable and uncontrollable marketing variables.c. product, place, price, and personnel.d. only those variables which a marketing manager can control.
The concept of a "product"a. includes goods but not services.b. includes potential customer satisfactions or benefits.c. includes all elements in the marketing mix.d. means a physical item with its related functional and aesthetic features.
The "price" variable isa. the most important part of the marketing mix.b. an uncontrollable variable for most marketing managers.c. independent of the nature of competition.d. none of these.
When demand is elastic and price , then total revenue increases, increasesc. decreases, decreases bAdecreases, increasesd. decreases, stays the same
The elasticity of demand for a product depends upon thea. availability of substitutes.b. importance of the item in the customer's budget.c. urgency of the customer's need.d. all of these.
The "place" variable is not concerned witha. the customer service level.b. when and where products and services are wanted.c. communicating which products and services are offered for sale, and where and when.d. channels of distribution.
Promotion is concerned witha. how appropriate messages are communicated to target customers.b. informing customers that the right product or service is available at the right place at the right price.c. blending personal selling, mass selling, and sales promotion.d. all of these.
Advertisinga. is another name for sales promotion.b. involves direct face-to-face relationships between sellers and potential customers.c. is any paid form of nonpersonal presentation of ideas, products, or services by an identified sponsor.d. is the only form of promotion which must be paid for.
A firm's promotion should seek to target customers about the company and its marketing mix.a. informd. all of theseb. persuadee. both a and bc. remind
Implementing the "marketing concept" includesa. customer orientation, resource utilization, and sales maximization.b. resource utilization, sales growth, and profit maximization.c. customer orientation, total company effort, and profit.d. customer orientation, total company effort, and sales growth.
Executing the marketing plan includesa. planning, implementing, and feedback.c. hiring, training, and planning.b. delegation, communication, and motivation.d. marketing, feedback, and control.
Marketing "control" does not includea. setting standards.c. measuring performance.b. implementing marketing strategies.d. taking corrective action.
Which of the following variables is within the control of marketing managers?a. consumer demographicsc. selection of a target marketb. public interest groupsd. level of technology
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