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Business Strategy and Accounting Basics

Learn business strategy and accounting basics with multiple-choice questions: income statements and balance sheets, break-even analysis (variable cost ratio, contribution margin ratio, margin of safety), depreciation (straight-line and declining-balance), financial indicators such as ROE, inventory valuation, business strategy tools such as SWOT analysis, PPM, five forces analysis and the value chain, marketing concepts such as the 4Ps and the product life cycle, analysis methods such as ABC analysis, decision trees and linear programming, investment appraisal by NPV, and the basics of intellectual property and contracts.

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Business Strategy and Accounting Basics: key points

The results of a semiconductor company depend not only on its technology but also on management decisions: which businesses to invest in and how much, at what price to sell, and how much must be made to earn a profit. The shape of the business, such as owning fabs that require huge capital investment or specializing in design as a fabless company, also affects the break-even point and resilience to economic cycles through the size of fixed costs and depreciation.

This topic covers accounting calculations such as reading the income statement, balance sheet and cash flow statement, break-even and target-profit sales, depreciation, ROE and the equity ratio, and inventory valuation; business strategy such as SWOT analysis, PPM, five forces analysis, the value chain, Porter's generic strategies and the experience curve; and marketing such as the 4Ps, STP, the product life cycle and pricing strategies. It also covers, mainly through calculation questions, ABC analysis, regression analysis, decision trees, the maximin principle, linear programming, investment appraisal by NPV, BPR and cloud services, copyright and patents, non-disclosure agreements and the idea of personal information. It also helps with the strategy sections of IT certification exams such as Japan's IT Passport, Fundamental and Applied Information Technology Engineer Examinations.

All Business Strategy and Accounting Basics questions (40)
  1. Among a company's financial statements, which correctly describes the balance sheet?
  2. In a certain period, the income statement shows sales of ¥80 million, cost of sales of ¥50 million, selling, general and administrative expenses of ¥18 million, non-operating income of ¥1 million, non-operating expenses of ¥3 million, extraordinary gains of ¥2 million and extraordinary losses of ¥4 million. Which is the ordinary profit for this period?
  3. A semiconductor manufacturer bought new manufacturing equipment and paid for it in cash. In the cash flow statement, in which section is this payment reported?
  4. Among the costs of a semiconductor fab, which is generally classified as a variable cost?
  5. A company has sales of ¥50 million, variable costs of ¥20 million and fixed costs of ¥24 million. Which is its break-even sales?
  6. Which is the margin of safety ratio of a company with sales of ¥200 million, a variable cost ratio of 70% and fixed costs of ¥45 million?
  7. In a business with fixed costs of ¥30 million and a variable cost ratio of 60%, which is the sales needed to make a profit of ¥10 million?
  8. A semiconductor manufacturer is developing a dedicated chip. The selling price per chip is ¥4,000, the variable cost per chip (wafer, package, test and so on) is ¥2,400, and the fixed costs such as mask making and design are ¥800 million. Which is the break-even sales volume?
  9. A business has fixed costs of ¥27 million and a variable cost ratio of 40%, and has no costs other than variable and fixed costs. Which is the sales needed to achieve an operating profit margin (operating profit ÷ sales) of 15%?
  10. There are two ways to make a product: plan A (fixed costs ¥10 million, variable cost ratio 60%) and plan B, which automates the production line (fixed costs ¥16 million, variable cost ratio 45%). Above a certain level of sales, plan B earns more profit than plan A. Which is that level?
  11. An inspection system with an acquisition cost of ¥12 million is depreciated by the straight-line method over a useful life of 5 years with a residual value of zero. Which is its book value (undepreciated balance) at the end of the third year?
  12. Manufacturing equipment with an acquisition cost of ¥10 million is depreciated by the declining-balance method with a rate of 0.4 (ignoring any switch of method based on a guaranteed depreciation amount). Which is its book value at the end of the second year?
  13. A company had net income of ¥12 billion, equity of ¥80 billion and total assets of ¥200 billion. Which is its ROE (return on equity)?
  14. A company's balance sheet shows current assets of ¥60 billion, fixed assets of ¥90 billion, current liabilities of ¥40 billion, fixed liabilities of ¥50 billion and net assets of ¥60 billion (all of which is equity). Which is the correct combination of its current ratio and equity ratio?
  15. In one month, a part had an opening inventory of 100 units (unit cost ¥1,000); on the 10th, 200 units were purchased at ¥1,300 each; on the 15th, 150 units were issued; on the 20th, 100 units were purchased at ¥1,400 each; and on the 25th, 150 units were issued. Which is the value of the ending inventory under the moving average method?
  16. A company making power semiconductors for automotive use performed a SWOT analysis. Which would be classified as an opportunity?
  17. In product portfolio management (PPM), how is a business with a high market growth rate and a high relative market share classified?
  18. Which correctly describes a "cash cow" business in PPM?
  19. For a semiconductor manufacturer, only a few makers can supply the manufacturing equipment it needs, so the equipment makers have the upper hand in negotiating prices and delivery times. Among the competitive forces of five forces analysis, which does this situation correspond to?
  20. Analog semiconductor maker A narrows its focus to a limited market, ICs for high-precision sensors in industrial equipment, and competes by providing products tailored to the detailed requirements of those customers. Among Porter's three generic strategies, which is company A's strategy?
  21. In Porter's value chain, which is classified as a primary activity?
  22. Which term describes the core technologies or capabilities of a company that bring value to customers and are hard for competitors to imitate?
  23. A semiconductor manufacturer acquired the materials maker that produces the wafers it uses, so that its group now handles everything from material supply to product manufacturing. Which form of integration is this?
  24. Compared with an IDM (integrated device manufacturer), which manufactures in its own fabs, which is a typical characteristic of a fabless company?
  25. The manufacturing cost of a product follows an experience curve in which the cost per unit becomes 80% each time cumulative production doubles (an 80% learning rate). If the cost per unit is ¥1,000 when cumulative production reaches 100,000 units, which is the cost per unit when cumulative production reaches 800,000 units?
  26. In the 4Cs, which reinterpret the 4Ps of the marketing mix from the customer's viewpoint, which corresponds to "Price" in the 4Ps?
  27. In the product life cycle, which is the stage at which sales growth slows, the market approaches saturation, competitors multiply and price competition intensifies?
  28. A microcontroller maker divided the market by application into automotive, industrial equipment, home appliances and so on, and decided to target the automotive market. It is now promoting "long-term stable supply and high reliability" so that customers recognize its products as positioned differently from competing products. Which STP step does this last effort correspond to?
  29. When launching a new measurement instrument, a company set a high price aimed at the few customers who value the new technology highly and want to adopt it early, recovered its development costs quickly, and then lowered the price step by step to follow demand. Which pricing strategy is this?
  30. The annual sales (in ¥10,000) of eight products are: product 1: 380, product 2: 55, product 3: 260, product 4: 30, product 5: 130, product 6: 85, product 7: 40 and product 8: 20. An ABC analysis sorts them in descending order of sales and classifies products with a cumulative share of 70% or less as A, over 70% up to 90% as B, and the rest as C. Which products are classified as B?
  31. At a fab, the monthly number of wafer starts x (thousand wafers) and electricity cost y (¥ million) were (x, y) = (2, 5), (4, 9), (6, 11) and (8, 15). If the regression line y = ax + b is found by the least squares method and the slope a is taken as the variable cost per thousand wafers and the intercept b as the fixed cost, which combination is correct?
  32. A company is considering investing in a new production line. A large investment (¥1 billion) is expected to bring revenue of ¥2.5 billion if demand is high (probability 0.6) and ¥800 million if demand is low (probability 0.4). A small investment (¥400 million) brings revenue of ¥700 million if demand is low; if demand is high, it brings ¥1.2 billion as is, but an additional investment of ¥500 million at that point raises revenue to ¥2.2 billion. If the policy that maximizes the expected profit (revenue minus investment) is adopted, which is that expected value?
  33. A company is considering three strategies S1 to S3. The expected profits (¥100 million) in a boom, normal and recession economy are 50, 30 and −10 for S1, 40, 25 and 5 for S2, and 30, 20 and 10 for S3, and the probabilities of each economy are unknown. Following the maximin principle (choose the strategy whose worst-case profit is largest), which strategy is chosen?
  34. A factory makes two products, X and Y. The profit per unit is ¥40,000 for X and ¥30,000 for Y; making one unit takes 2 hours of machine time for X and 1 hour for Y, and 1 hour of worker time for both X and Y. If up to 100 machine hours and 80 worker hours are available per week, which is the maximum weekly profit?
  35. Introducing a business system with an investment of ¥10 million is expected to save ¥4 million in costs at the end of each of the next three years. With a discount rate of 5% per year, and present value factors (1 ÷ 1.05ⁿ) of 0.952, 0.907 and 0.864 for one, two and three years ahead, which is closest to the net present value (NPV) of this investment?
  36. Which is the approach of fundamentally reviewing and redesigning business processes, without taking current procedures or organization as given, in order to achieve a company's goals?
  37. Among cloud services, which is the one in which the provider supplies infrastructure such as virtual machines, storage and networks, while the user installs and manages the OS, middleware and applications?
  38. Which correctly describes the protection of intellectual property in software and technology?
  39. Which is the contract concluded before showing unpublished technical information to a company with which joint development is being considered, in which the parties promise not to use the disclosed information for purposes other than the evaluation and not to leak it to third parties?
  40. Which correctly describes a basic idea of Japan's Act on the Protection of Personal Information?

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