In regards to benchmarking, which of the following statements is incorrect?
A) Benchmarking is the practice of comparing a company with other leading companies.
B) The industry average is not a useful benchmark for evaluating a company.
C) Providing common-size percentages in a graphical manner highlights differences.
D) The two main types of benchmarks in financial statement analysis include benchmarking against the industry average and benchmarking against a key competitor.
B
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One challenge facing Hudson Foods as it expands into Europe is getting through all the bureaucratic and legal regulations surrounding the food industry. Erica plans to hire a manager to ensure that this challenge is overcome
Who among the following will Erica most likely recruit for this position? A) a local manager with strong government contacts B) an experienced manager from the Hudson Foods U.S. headquarters C) a native of the target market who is a recent U.S. college graduate D) a candidate from the U.S. with extensive management experience in the frozen food industry
A firm wants to borrow $100 million for 5 years (pure discount, for simplicity). Which of the following sources has the lower effective interest cost?
Orig. Fee/ Source Interest Rate Flotation Cost Private Placement 9. 00% 1% Public Issue 8.25% 3% a. The private placement b. The public issue c. The costs are the same FORMULA: Effective interest cost=ieffective = , where P is the amount of loan proceeds that the firm needs, f is the loan origination fee or flotation cost as a fraction of P, and istated is the stated interest cost.