Question

If a company's actual results for revenues, net profits, EPS, and ROE turn out to be worse than projected, then it is usually because managers either overestimated the reduction in reject rates that would be achieved at the company's production facilities or overestimated the cost savings forthcoming from the company's investments in one or more production improvement options at its production facilities the updates of the regional-average competitive efforts that company managers made (or failed to make) in the Competitive Assumptions boxes on the Internet Marketing and Wholesale Marketing decision screens turned out to underestimate the actual strength of the overall competitive effort performance projections that were too optimistic managers inadvertently made mistakes in entering decisions val firms in one or more geographic regions, thus resulting in of one or more of the following factors: company managers failed to win one or more bids to supply private-label footwear to chain retailers and/or did not win any of their bids for celebrity endorsements and/or overspent for corporate citizenship and socially responsible activities and/or were surprised by the amount of penalty interest the company had to pay on its unexpected overdraft loan the company's S/Q rating on the branded footwear it offered for sale was too far below the average S/Q rating of rival companies in one or more geographic regions to generate the unit sales and revenues needed to achieve the projections

Answer 1

Correct Answer:

Managers either overestimated the reduction in reject rates that would be achieved at the company’s production facilities or overestimated the cost savings forthcoming from the company’s investments in one or more production improvement option at its production facilities.

Reason: company revenues, net profits and Earnings per share (EPS) mainly depend on the cost saving inside the business organization. Once managers over estimated the reduction in reject rates or cost saving and fails to pursue those decisions. Company may face loss. Eventually business turn out to be worse than they projected.

Other reasons given above in the questions are irrelevant to the current question scenario.