10. Sustancias químicas
10.7. Vigilancia médica y de la salud de los trabajadores
5.5 SAMPSAMPLE LE ESSESSAY AY QUESQUESTIONTIONSS
The Gleim essay questions in the
The Gleim essay questions in the CMA Review CMA Review books, Gleim Online, and Essay Wizard allow youbooks, Gleim Online, and Essay Wizard allow you to prepare for the essay sec
to prepare for the essay section of the CMA exam under true tion of the CMA exam under true exam conditions. exam conditions. Here are two examplesHere are two examples of essay scenarios that
of essay scenarios that might appear on the CMA exam. might appear on the CMA exam. Note that a scenario is presentNote that a scenario is presented first,ed first, followed by a question or questions
followed by a question or questions based on the information given in the sbased on the information given in the scenario. cenario. Remember, essayRemember, essay questions are used on the exam to reflect a more “real-world” environment in which candidates must questions are used on the exam to reflect a more “real-world” environment in which candidates must apply the knowledge that they hav
apply the knowledge that they have learned. e learned. The answers to these essThe answers to these essay questions are provided at theay questions are provided at the end of this study unit.
end of this study unit. Remember, you would allocate half Remember, you would allocate half of your total time on each sof your total time on each scenario, evencenario, even though each may contain a different
though each may contain a different number of questions.number of questions.
Scenario for Essay Questions 1 and 2 Scenario for Essay Questions 1 and 2
Almost all major United States companies have
Almost all major United States companies have production facilities and marketing outletsproduction facilities and marketing outlets throughout the world, and the pace of
throughout the world, and the pace of multinationalism has accelerated in recmultinationalism has accelerated in recent years. ent years. By the earlyBy the early 1970s, United States multinationals conducted one-quarter of the
1970s, United States multinationals conducted one-quarter of the world’s merchandise export trade.world’s merchandise export trade. During the period from 1999
During the period from 1999 to 2003, direct investment in the to 2003, direct investment in the U.S. by foreign companies fluctuatedU.S. by foreign companies fluctuated between about $50 billion and about $330 billion.
between about $50 billion and about $330 billion. Investment abroad by U.S. Investment abroad by U.S. companies ranged fromcompanies ranged from about $120 billion to about $255 billion.
about $120 billion to about $255 billion. A few U.S. corporations havA few U.S. corporations have more than half of their assets e more than half of their assets inin foreign countries.
foreign countries. In aggregate terms, roughly 400 multinational In aggregate terms, roughly 400 multinational enterprises produce perhaps as muchenterprises produce perhaps as much as one-third of the free world’s
as one-third of the free world’s industrial output. industrial output. Multinational corporations have wholly-owned foreignMultinational corporations have wholly-owned foreign subsidiaries, partially-owned foreign joint ventures, and/or patent and
subsidiaries, partially-owned foreign joint ventures, and/or patent and trademark licensing agreementstrademark licensing agreements abroad.
abroad. Some of the more sophisticated cSome of the more sophisticated corporations have foreign research and development actorporations have foreign research and development activitiesivities and multinational management organizations.
and multinational management organizations.
Questions Questions
1.
1. DescrDescribe ibe the the reasonreasons ws why hy firms firms decide decide to to becombecome me multinaultinationaltional.. 2.
2. Identify Identify and and describe describe both both the the advantages advantages and and disadvantages disadvantages of of multinational multinational corporationscorporations from the point of view of the
from the point of view of the a.
a. HoHome me cocoununtrtryy b.
Scenario for Essay Questions 3, 4, and 5 Scenario for Essay Questions 3, 4, and 5
RealTalk, Inc. manufac
RealTalk, Inc. manufactures specialized video-conferencing equipment. tures specialized video-conferencing equipment. Production of specializedProduction of specialized units is generally performed under contract, while standard units are produced in accordance with units is generally performed under contract, while standard units are produced in accordance with marketing projections.
marketing projections. Maintenance of customer equipment is Maintenance of customer equipment is an essential service provided andan essential service provided and accounts for a significant portion
accounts for a significant portion of revenue. of revenue. Recent economic conditions have Recent economic conditions have caused a decline incaused a decline in RealTalk’s business.
RealTalk’s business. RealTalk’s Income Statement RealTalk’s Income Statement for the fiscal year just for the fiscal year just ended is below.ended is below. RealTalk, Inc.
RealTalk, Inc.
Income Statement ($000 omitted) Income Statement ($000 omitted) For the Year Ended June 30, 2008 For the Year Ended June 30, 2008 E
Eqquuiippmmeennt t ssaallees s $$66,,000000
R
Reevveennuue e ffrroom m mmaaiinntteennaanncce e ccoonnttrraacctts s 11,,880000 T
Toottaal l ssaallees s $$77,,880000
C
Coosst t oof f ggoooodds s ssoolld d 44,,660000
C
Cuussttoommeer r mmaaiinntteennaanncce e eexxppeennsse e 11,,000000 S
Seelllliinng g eexxppeennsse e 660000
A
Addmmiinniissttrraattiivve e eexxppeennsse e 990000
IInntteerreesst t eexxppeennsse e 115500
T
Toottaal l eexxppeennssees s $$77,,225500
IInnccoomme e bbeeffoorre e iinnccoomme e ttaaxxees s 555500
IInnccoomme e ttaaxxees s 222200
N
Neet t iinnccoomme e $ $ 333300
RealTalk’s return on sales before interest and
RealTalk’s return on sales before interest and taxes was 9% for the year just endtaxes was 9% for the year just ended, while theed, while the industry average was 12%.
industry average was 12%. The company’s total asset The company’s total asset turnover was 3 times, and turnover was 3 times, and its return on averageits return on average assets before interest and taxes
assets before interest and taxes was 27%, both well below induswas 27%, both well below industry averages. try averages. To improve performanceTo improve performance and raise these ratios nearer
and raise these ratios nearer to, or above, industry averages, the president to, or above, industry averages, the president of RealTalk has establishedof RealTalk has established the following goals for the coming y
the following goals for the coming year: ear: (1) 11% return on sales before interest (1) 11% return on sales before interest and taxes, (2) 4 timesand taxes, (2) 4 times total asset turnover, and (3) 35%
total asset turnover, and (3) 35% return on average assets before interest return on average assets before interest and taxes.and taxes. To achieve these goals, RealTalk’s management team took into
To achieve these goals, RealTalk’s management team took into consideration the growingconsideration the growing international video-conferencing market and proposed the following actions for the coming year: international video-conferencing market and proposed the following actions for the coming year:
●
● Increase sales prices for equipment by 10%.Increase sales prices for equipment by 10%. ●
● Increase the cost of each unit Increase the cost of each unit sold by 3% for needed sold by 3% for needed technology and quality improvements.technology and quality improvements. ●
● Increase maintenance inventory by $250,000 at the beginning of the year and add twoIncrease maintenance inventory by $250,000 at the beginning of the year and add two
maintenance technicians at a total cost of $1
maintenance technicians at a total cost of $130,000 to improve customer service and30,000 to improve customer service and response time.
response time. The increased inventory will be fThe increased inventory will be financed at an annual interest rate of 12%inanced at an annual interest rate of 12%;; no other borrowings or loan reductions are cont
no other borrowings or loan reductions are contemplated during the coming year. emplated during the coming year. All other All other assets will be held to the same levels as the year ended.
assets will be held to the same levels as the year ended.
●
● Increase selling expenses by $250,000 but Increase selling expenses by $250,000 but hold administrative expenses to the same levelhold administrative expenses to the same level
as the year just ended. as the year just ended. It is expected that these actions will
It is expected that these actions will increase equipment unit sales by 6%, with a increase equipment unit sales by 6%, with a corresponding 6%corresponding 6% growth in maintenance contracts.
growth in maintenance contracts.
Question Question
3.
3. Prepare a Prepare a pro formpro forma income a income statement statement for RealTalkfor RealTalk, Inc, Inc. for . for the fthe fiscal year iscal year ending June ending June 30,30, 2009, on the assumption that the proposed actions are implemented as planned and that 2009, on the assumption that the proposed actions are implemented as planned and that the increased sales objectives w
the increased sales objectives will be met. ill be met. (Assume a 40% effective (Assume a 40% effective tax rate, and round alltax rate, and round all numbers to the nearest thousand, i.e., $000
numbers to the nearest thousand, i.e., $000 omitted.)omitted.) 4.
4. Determine Determine if tif the preshe president’s ident’s goals goals will be will be achieved achieved by by calculating calculating the the following following ratios ratios for for thethe year ended June 30, 2009:
year ended June 30, 2009: (a) Return on sales before interest and t(a) Return on sales before interest and taxes, (b) Total assetaxes, (b) Total asset turnover, and (c) Return on
turnover, and (c) Return on average assets before interest and taxes.average assets before interest and taxes. 5.
5. DiscuDiscuss thss the limie limitatiotations and ns and diffidifficulticulties thaes that can t can be encobe encountereuntered in usd in using raing ratio anatio analysislysis,, particularly when making comparisons to industry averages.
Essay Questions 1 and 2 -- Unofficial Answers Essay Questions 1 and 2 -- Unofficial Answers
1.
1. Most Most firms firms become become multimultinationnational tal to expo expand and marketmarkets ans and imd improve prove profiprofit pott potentialential. . ManyMany multinational firms began with efforts to secure national
multinational firms began with efforts to secure national resources that were not available inresources that were not available in the home country.
the home country. These firms were seeking long-term These firms were seeking long-term security rather than cost security rather than cost savings.savings. Expansion into foreign markets often occurs where
Expansion into foreign markets often occurs where firms have a monopolistic advantagefirms have a monopolistic advantage over the foreign competition.
over the foreign competition. This advantage is associated wThis advantage is associated with advanced technology,ith advanced technology, strong product differentiation, or economies of scale, and
strong product differentiation, or economies of scale, and is frequently protected byis frequently protected by proprietary knowledge or
proprietary knowledge or trademarks. trademarks. Without these special Without these special advantages, the foreigner advantages, the foreigner would be at a
would be at a disadvantage as local firms would be disadvantage as local firms would be more familiar with local markets, laws,more familiar with local markets, laws, and customs.
and customs. Because of import tariffs, Because of import tariffs, high transportation costs, and national high transportation costs, and national purchasingpurchasing policies, firms frequently have difficulty increasing market share in
policies, firms frequently have difficulty increasing market share in foreign countries.foreign countries. Rather than contend with these barriers, firms establish
Rather than contend with these barriers, firms establish production facilities and distributionproduction facilities and distribution centers in the foreign countries,
centers in the foreign countries, thereby overcoming economic disadvantages. thereby overcoming economic disadvantages. To improveTo improve their competitive position, many firms establish foreign facilities to take advantage
their competitive position, many firms establish foreign facilities to take advantage of lessof less expensive resources.
expensive resources. 2.
2. a. a. The The advantadvantages ages of of multimultinationnational al corpocorporationrations s from from the the point point of of view view of of the the countcountryry include the following:
include the following: Direct foreign investmDirect foreign investment often has a ent often has a favorable balance of favorable balance of payments effect from
payments effect from profits, dividends, and patent royaltiesprofits, dividends, and patent royalties. . While there may be anWhile there may be an initial transfer of capital abroad, this
initial transfer of capital abroad, this capital does not always come from the capital does not always come from the homehome country.
country. In addition, many In addition, many multinationals export commultinationals export components for assembly ponents for assembly abroad,abroad, and these exports
and these exports help the home counthelp the home country’s balance of payry’s balance of payments. ments. MultinationalsMultinationals promote international trade, contribute to the
promote international trade, contribute to the effectiveness of international monetaryeffectiveness of international monetary arrangements, and help m
arrangements, and help maintain liberal trade policies. aintain liberal trade policies. The profits and kThe profits and knowledgenowledge gained from foreign operations may be used to expand or improve home industries. gained from foreign operations may be used to expand or improve home industries. The disadvantages of multinational corporations from the
The disadvantages of multinational corporations from the point of view of the homepoint of view of the home country include the
country include the following: following: Because the foreign Because the foreign investment of sinvestment of some multinationalsome multinationals replaces exports from the home country, there
replaces exports from the home country, there is a negative effect on the is a negative effect on the balance of balance of payments.
payments. When factories are When factories are built abroad, jobs are built abroad, jobs are exported, and corporations exported, and corporations havehave the option of moving additional operations out
the option of moving additional operations out of the country. of the country. Multinationalism mayMultinationalism may give a corporation certain advantages in
give a corporation certain advantages in its home market that purely domestic rivalsits home market that purely domestic rivals cannot match.
cannot match. The advantages include The advantages include vertical integration, the vertical integration, the spreading of jointspreading of joint costs over many markets, and the use of
costs over many markets, and the use of foreign profits to boost the home foreign profits to boost the home marketmarket position.
position. Multinationals may be subject tMultinationals may be subject to the risk of foreign expropriation of o the risk of foreign expropriation of assets.assets. b.
b. The advantages The advantages of multof multinational corporations inational corporations from tfrom the point he point of view of view of the of the host host countrycountry include:
include: Multinationals can promote Multinationals can promote economic development and economic development and prosperity in theprosperity in the host country.
host country. The infusion of capital can mobilize The infusion of capital can mobilize host country resources, boosthost country resources, boostinging output and efficiency.
output and efficiency. Expanding exports improve Expanding exports improve the host country’s the host country’s balance of balance of payments.
payments. The introduction of The introduction of new technology by new technology by multinationals saves multinationals saves less-less- developed countries the costs of developing
developed countries the costs of developing technology and adds to the technology and adds to the country’scountry’s productive capabilities.
productive capabilities. Local employment usually Local employment usually increases and results increases and results in anin an improved standard of
improved standard of living. living. Multinationals provide training Multinationals provide training for skilled workers for skilled workers andand managers.
managers.
The disadvantages of multinational corporations from the
The disadvantages of multinational corporations from the point of view of the hostpoint of view of the host country include the following:
country include the following: Multinationals may contribute to Multinationals may contribute to a net capital outflow ina net capital outflow in the host country as profits
the host country as profits are repatriated and royalties are paid. are repatriated and royalties are paid. Capital outflowCapital outflow problems can be aggravated by
problems can be aggravated by arbitrary transfer prices among multinationalarbitrary transfer prices among multinational subsidiaries.
subsidiaries. This is done to move profitThis is done to move profits to those countries where ts to those countries where taxes are low or axes are low or to evade laws
to evade laws restricting repatriation of restricting repatriation of profits. profits. Multinationals may Multinationals may causecause inappropriate technology to
inappropriate technology to be introduced. be introduced. Most advanced tecMost advanced technology is capital-hnology is capital- intensive and labor-saving, and may not be in the best interests of less-developed intensive and labor-saving, and may not be in the best interests of less-developed
Essay Questions 3, 4, and 5 -- Unofficial Answers Essay Questions 3, 4, and 5 -- Unofficial Answers
3
3. . RReeaallTTaallk k IInncc..
Pro Forma Income Statement Pro Forma Income Statement For the Year Ending June 30, 2009 For the Year Ending June 30, 2009
($000 omitted) ($000 omitted) E
Eqquuiippmmeennt t ssaallees s (($$66,,00000 0 × × 11..006 6 × × 11..1100) ) $$66,,999966 M
Maaiinntteennaanncce e ccoonnttrraacctts s (($$11,,88000 0 × × 11..0066) ) 11,,990088 T
Toottaal l ssaallees s $$88,,990044
C
Coosst t oof f ggoooodds s ssoolld d (($$44,,66000 0 × × 11..003 3 × × 11..0066) ) 55,,002222 Cu
Custstomomer er mamainintetenanancnce e exexpepensnse e ($($1,1,00000 0 + + $1$13030) ) 1,1,131300 S
Seelllliinng g eexxppeennsse e (($$66000 0 + + 225500) ) 885500 A
Addmmiinniissttrraattiivve e eexxppeennsse e 990000
IInntteerreesst t eexxppeennsse e [[$$11550 0 + + (($$22550 0 × × ..1122))] ] 118800 T
Toottaal l eexxppeennssees s $$88,,008822
IInnccoomme e bbeeffoorre e ttaaxxees s 882222
IInnccoomme e ttaaxxees s (($$88222 2 × × ..44) ) 332299 N
Neet t iinnccoomme e $ $ 449933
4.
4. Return Return on on sales sales beforbefore e intereinterest st and and taxes taxes = = EBIT EBIT ÷ Sa÷ Salesles
= ($493 + $329 + $180) ÷ $8,904 = ($493 + $329 + $180) ÷ $8,904 = 11.25%; exceeds 11% goal = 11.25%; exceeds 11% goal Total asset turnover = Sales ÷ Average assets
Total asset turnover = Sales ÷ Average assets
= $8,904 ÷ (2004 turnover + $250) = $8,904 ÷ (2004 turnover + $250) = $8,904 ÷ [($7,800 ÷ 3) + $250] = $8,904 ÷ [($7,800 ÷ 3) + $250] = $8,904 ÷ ($2,600 + $250) = $8,904 ÷ ($2,600 + $250)
= 3.12 times; does not achieve 4
= 3.12 times; does not achieve 4 timestimes Return on average assets before interest
Return on average assets before interest and taxes and taxes = EBIT ÷ Average assets= EBIT ÷ Average assets
= ($493 + $329 + $180) ÷ ($2,600
= ($493 + $329 + $180) ÷ ($2,600 + $250)+ $250) = 35.16%; exceeds 35% goal
= 35.16%; exceeds 35% goal 5.
5. Identical Identical companies companies may may use use different different valuation valuation or or expense expense methods, methods, making making comparabilitycomparability difficult.
difficult. Special circumstances not encSpecial circumstances not encountered by the industry may be the ountered by the industry may be the cause of cause of deviation from the industry.
deviation from the industry. A blend of techniques should be used with A blend of techniques should be used with ratio analysis whenratio analysis when making comparisons to the industry.