Exam 11: Projecting Financial Requirements

The conventional measure of a firm's liquidity is the

In a 2009 survey Inc.com asked its readers "What is the hardest part of owning a business right now?" The leading problem cited was

The greater a firm's sales, the greater need for financing because of greater _____ requirements.

Pro forma financial statements mean that the financial statements are prepared in the proper format.

A firm should finance its growth in such a way as to maintain adequate

There must be a corresponding dollar of financing for every dollar of assets. Stated another way, debt plus assets must equal total equity.

A business plan should specify that at least _____ of the firm's financing should come from equity, and the rest will come from debt.

The most common way that entrepreneurs accomplish more with less is called

What are the two sources of equity ownership in a business?

The cash budget is concerned only with dollars received and dollars paid out.

The assets-to-sales relationship tends to be relatively constant within an industry, allowing for a(n) _____ technique to be utilized in projecting asset requirements.

Although the asset-to-sales ratio varies over time and with individual businesses, it tends to be relatively constant within an industry. This allows the startup to use the method of estimating asset requirements called the percentage-of-sales technique.

When developing pro forma cash flow statements the following numbers must be scrutinized carefully except

For every dollar of assets there must be a corresponding dollar of

D&R Products forecast first year asset requirements of $143,000; therefore, the total debt requirement must be

One real danger in over-reliance on a cash budget is that it may lead to

Working capital refers to current assets which include the following except

Most firms of any size need fixed assets which include

Projections of a venture's profits, its asset and financing requirements and its cash flows are essential in determining whether a venture is economically viable.

David Allen plans to invest $110,000 of his personal savings to provide the needed startup equity for D&R Products, Inc. He will receive _____ for his investment.