A Regional Manager for a Chain of Auto Parts Stores

question 155

Multiple Choice

A regional manager for a chain of auto parts stores visits one of the stores in the chain.He looks in the store's warehouse and finds about 100 cases of motor oil that have been sitting in the warehouse for over one year.Upon inspection,he finds that in each case,one of the twelve cans of oil has leaked,thus soaking through the box and making the case unfit for sale.The regional manager instructs the store manager to unpack all of the cases,discard the leaking cans,clean up the remaining cans,and to contact the oil company for new boxes.He tells the store manager to repackage the remaining cans in the new boxes and to sell the cases to customers at the retailer's cost with no added markup.He explains to the store manager that moving this inventory will not result in immediate profit,but that it will benefit the store by improving the ______.

• A) markup
• B) markup rate
• C) markup percent
• D) stockturn rate
• E) break-even point

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Definitions:

Cash Flow

The total amount of money being transferred into and out of a business, especially as affecting liquidity.

Callable Bonds

Bonds that can be redeemed by the issuer prior to their maturity date, usually at a premium above the face value.

Financing Activities

Transactions involving changes in equity and long-term liabilities on the balance sheet, reflective of how a company raises capital and repays its investors.

Amortization

Amortization is the process of gradually writing off the initial cost of an intangible asset over its useful life, reflecting its consumption or expiration.