Review sheet # 1

Name:___________________________ Chapter # 4 – Review Sheet # 1Date:________________________Multiple Choice1. The NFL’s current TV contract calls for the league to be paid more than _______ peryear.A. $3 billionB. $3 millionC. $100 millionD. $100 billionResponse: p. 582. SportBusiness Journal estimates that total spending across the entire sports industryamounted to approximately ______ in 2006.A. $214 millionB. $214 billionC. $1 billionD. $1 trillionResponse: p. 593. The concept of _______ is probably the best single measure of an industry’s impact.A. total outputB. total spendingC. aggregate market value of firms in industryD. value-addedResponse: p. 594. Which of the following most accurately defines the managerial discipline of finance?A. how an organization generates the funds that flow into the organizationB. how an organization allocates its funds once they are in the organizationC. any decision relating to moneyD. all of the aboveE. answers A & B aboveResponse: 615. In a basic sense, the financial success of an organization is ultimately dependent on:A. revenuesB. salesC. profitsD. expensesE. answers A & B aboveResponse: p. 61

Name:___________________________ Chapter # 4 – Review Sheet # 1Date:________________________6. ______ is/are anything that an organization owns that can be used to generate futurerevenues.A. assetsB. liabilitiesC. owners’ equityD. bondsE. answers A & C aboveResponse: p. 627. All of the following are examples of publicly traded sport companies EXCEPT:A. Bally Total Fitness HoldingB. NikeC. University of Notre Dame athletic departmentD. Callaway GolfE. All of the above are publicly traded sport companiesResponse: p. 63-648. As chronicled in the book Moneyball, the strategy employed by the small-marketOakland A’s general manager Billy Beane to better compete with large-market teams byidentifying and acquiring undervalued players is an example of an organizationmaximizing its ______.A. revenuesB. tax breaksC. athlete endorsementsD. return on investmentResponse: p. 659. Which statement concerning the tradeoff between financing through debt or equity istrue?A. Generally, financing with debt is more expensive than equity.B. Generally, financing with debt carries more risk than equity.C. Both A & BD. Neither A nor BResponse: p. 6610. Which financial statement measures the financial performance of an organizationover a specified time period, usually a year?A. statement of cash flowsB. income statementC. balance sheetD. financial ledgerResponse: p. 61

Name:___________________________ Chapter # 4 – Review Sheet # 1Date:________________________Short Answer46. Define the concept of return on investment (ROI). Discuss how to calculate it andhow it is applied by a sports organization in determining how that organization managesits assets.Ans: ROI shows the expected dollar-value return on each alternative investment, state asa percentage of the original cost of the investment. First: calculate the initial cost of eachinvestment alternative. Second: estimate the magnitude of revenues each alternative willgenerate. Requires managers to think about the future, which is notoriously difficult topredict accurately.Response: p. 65