BLMA Models, the Company Profiled in the Opening Feature in Chapter

question 21

Multiple Choice

BLMA Models, the company profiled in the opening feature in Chapter 8, sells model trains and model train accessories. According to the feature, the biggest challenge the company has faced is:

• A) cash flow management
• B) constructing realistic pro forma financial statements
• C) preparing budgets
• D) hiring qualified personnel
• E) achieving profitability

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Definitions:

Profitability

Refers to a company's ability to generate earnings over its costs and expenses.

Controllable Margin

Controllable margin refers to the amount of profit or income that can be directly influenced by the management's decisions, usually excluding fixed costs and overhead.

Operating Assets

Assets that are used for day-to-day functioning of a business and generating revenue, such as inventory, machinery, and buildings.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the ratio of net profit to the initial cost of the investment.