NAMA Financial Management & Pricing 4 — Questions and Answers
Question 1: What financial metric best helps a vending operator evaluate profitability on a per-machine basis?
- Total company revenue
- Earnings before interest and taxes (EBIT) per machine (Correct answer)
- Gross sales per route
- Accounts payable balance
Correct answer: Earnings before interest and taxes (EBIT) per machine
EBIT per machine isolates each machine's contribution after direct costs but before financing and taxes, enabling accurate comparison.
Question 2: A vending operator notices that a cold drink machine's sales dropped 20% after raising prices 15%. This indicates:
- Inelastic demand for the product
- Elastic demand where higher prices reduced volume significantly (Correct answer)
- A supply chain problem
- Seasonal demand variation
Correct answer: Elastic demand where higher prices reduced volume significantly
When a price increase causes a proportionally larger drop in sales volume, demand is elastic.
Question 3: Which of the following is an example of a variable cost in vending operations?
- Annual machine lease payment
- Monthly route driver salary
- Cost of goods purchased for resale (Correct answer)
- Business liability insurance premium
Correct answer: Cost of goods purchased for resale
Cost of goods is a variable cost because it changes directly in proportion to the number of products sold.
Question 4: A vending operator uses DEX data to reconcile sales. Which scenario indicates a potential theft or accounting problem?
- DEX sales match cash collected exactly
- Cash collected exceeds DEX-reported sales
- DEX-reported sales significantly exceed cash collected (Correct answer)
- DEX data and cashless payments are equal
Correct answer: DEX-reported sales significantly exceed cash collected
When DEX reports more sales than cash collected, it suggests cash theft, skimming, or cashier errors.
Question 5: What is the purpose of a 'location profitability report' in vending management?
- To schedule machine maintenance intervals
- To rank locations by net profit after all direct costs (Correct answer)
- To track product expiration dates
- To measure customer satisfaction scores
Correct answer: To rank locations by net profit after all direct costs
A location profitability report ranks each location by the net profit it generates after commissions, service costs, and product costs are deducted.
Question 6: When calculating the true cost of a vending route, which factor is often overlooked?
- Product wholesale cost
- Driver fuel expenses
- Machine depreciation and opportunity cost of capital (Correct answer)
- Cashless processing fees
Correct answer: Machine depreciation and opportunity cost of capital
Depreciation and the opportunity cost of capital tied up in machines are frequently omitted but significantly impact true route profitability.
Question 7: A vending operator has $50,000 in current assets and $20,000 in current liabilities. What is the current ratio?
- 0.4
- 1.5
- 2.0
- 2.5 (Correct answer)
Correct answer: 2.5
Current ratio = Current Assets / Current Liabilities = $50,000 / $20,000 = 2.5.
NAMA Financial Management & Pricing 4
What financial metric best helps a vending operator evaluate profitability on a per-machine basis?