CBO Business Operations Management 4

Question 1

A business operator is reviewing cash flow and notices a profitable company has a negative operating cash flow. What is the most likely explanation?

Accepted Answer

Rapid growth is consuming cash through rising receivables and inventory

Answer

Fast-growing profitable companies often have negative operating cash flow because cash is tied up in growing receivables and inventory before collections occur.

Question 2

Which type of market research involves analyzing existing data collected for another purpose, such as government census reports?

Accepted Answer

Secondary research

Answer

Secondary research uses previously collected data from external sources, which is faster and less expensive than primary data collection.

Question 3

A business operator must choose between two equipment options: one with lower upfront cost but higher maintenance, and one with higher upfront cost but lower maintenance. Which analysis tool is most appropriate?

Accepted Answer

Total cost of ownership (TCO) analysis

Answer

TCO analysis calculates all costs over an asset's useful life, including purchase, operation, maintenance, and disposal, enabling a true cost comparison.

Question 4

An employee handbook provision states employees are 'at-will.' What does this legally mean in most U.S. states?

Accepted Answer

Either the employer or employee may end employment at any time for any lawful reason

Answer

At-will employment means either party can end the employment relationship at any time without cause, as long as the reason is not legally prohibited.

Question 5

A business operator is building a budget and wants to start from zero assumptions rather than adjusting prior year figures. Which budgeting method applies?

Accepted Answer

Zero-based budgeting

Answer

Zero-based budgeting requires every expense to be justified from scratch each period, eliminating automatic carryover of prior spending.

(CBO) Certified Business Operator Practice Test

(CBO) Certified Business Operator Practice Test

CBO Business Operations Management 4