Exam 11: Projecting Financial Requirements

The following tactics represent bootstrapping except

Profits reward an owner for investing in a company and constitute a primary source of financing for future growth.

Profits that are retained within the company rather than being distributed to the owners are referred to as retained earnings.

Most firms of any size need working capital which includes the following except

High-tech businesses (such as computer manufacturers) generally require more assets than service businesses.

The overall approach to forecasting is straightforward - entrepreneurs make _____ and, based on these _____, determine financial requirements.

A simple listing of expected cash inflows and outflows provides the entrepreneur with a(n)

The cost of goods sold can be either fixed or variable.

Financial projections should be limited to the income statement to prevent information overload on lenders and investors.

D&R Products forecast that it will require $10,000 for equipment and $40,000 for a building. These items will be reflected in the balance sheet as _____.

Winston Wolfe believes it is important to produce a profit and loss statement every

The term net working capital means current assets less current liabilities and is a measure of a company's liquidity.

Unless the owner's personal living expenses during the initial period of operation are part of the business's capitalization, they need not be considered in the financial plan.

Cecilia Levine purchased badly needed equipment from a customer who deducted an amount from his invoices to cover the cost of the equipment. This strategy on the part of Levine illustrates a growth strategy called

What are the asset categories that constitute working capital?

Entrepreneurs tend to be conservative and usually underestimate what they can actually achieve when it comes to future sales.

To the greatest extent possible the entrepreneur should use other people's resources, a common way entrepreneurs accomplish more with less. This is called bootstrapping.