Question 1

Why should a small business owner want to exit a business?

Accepted Answer

All the assets are in the business; on paper, the owner might seem wealthy; cash out on the venture; individuals are not liquid.

Question 2

In the Tealuxe case study, the business filed for:

Accepted Answer

A)  Chapter 7 
B)  Chapter 11 
C)  Chapter 12 
D)  Chapter 13 
A)  Chapter 7 
B)  Chapter 11 
C)  Chapter 12 
D)  Chapter 13 B

Question 3

In the Friend's Home Health case study, the buyout offer was:

Accepted Answer

A)  $400,000 
B)  $500,000 
C)  $600,000 
D)  none of these 
A)  $400,000 
B)  $500,000 
C)  $600,000 
D)  none of these A

Question 4

Which of the following methods of valuation takes the earnings (net profit) of an organization, and subtracts or adds in any unusual items that an investor feels are not customary?

Accepted Answer

A)  price/earnings valuation 
B)  asset-based valuation 
C)  market estimation valuation 
D)  capitalization of earnings valuation 
A)  price/earnings valuation 
B)  asset-based valuation 
C)  market estimation valuation 
D)  capitalization of earnings valuation

Question 5

In the Tealuxe case study, the founder:

Accepted Answer

A)  had significant interest in actively managing the operational side of the business 
B)  had no interest in actively managing the operational side of the business 
C)  had significant interest in actively managing the storefronts 
D)  none of these 
A)  had significant interest in actively managing the operational side of the business 
B)  had no interest in actively managing the operational side of the business 
C)  had significant interest in actively managing the storefronts 
D)  none of these

Question 6

In the Friend's Home Health case study, the founders:

Accepted Answer

A)  knew how much their company was worth 
B)  had to figure out how much their company was worth 
C)  did not have a need to know how much their company was worth 
D)  none of these 
A)  knew how much their company was worth 
B)  had to figure out how much their company was worth 
C)  did not have a need to know how much their company was worth 
D)  none of these

Question 7

Maintaining an estimate of value of a business as it grows and develops is the responsibility of the:

Accepted Answer

A)  shareholder 
B)  owners 
C)  investors 
D)  accounting firm 
A)  shareholder 
B)  owners 
C)  investors 
D)  accounting firm

Question 8

Perquisites for owners are given to maximize their benefits.

Accepted Answer

A) True 
 B)False

Question 9

A decline in the performance of a business can generally be attributed to what factors?

Accepted Answer

A)  factors both internal and external to the firm 
B)  internal factors such as a poor inventory management system 
C)  external factors such as a competitor introducing a new and improved product customers desire 
D)  all of these 
A)  factors both internal and external to the firm 
B)  internal factors such as a poor inventory management system 
C)  external factors such as a competitor introducing a new and improved product customers desire 
D)  all of these

Question 10

Bankruptcy is an option for a small business owner if the turnaround effort does not succeed quickly enough.

Accepted Answer

A) True 
 B)False

Question 11

According to the book, if a business owner's efforts to turn around the business fail, what is the best option?

Accepted Answer

A)  declare bankruptcy of the business 
B)  personally pay the debts of the business 
C)  declare personal bankruptcy 
D)  have a going out of business sale 
A)  declare bankruptcy of the business 
B)  personally pay the debts of the business 
C)  declare personal bankruptcy 
D)  have a going out of business sale

Question 12

In the Friend's Home Health case study, the founders were:

Accepted Answer

A)  caught off-guard when a rehabilitation center offered to buy them out 
B)  looking for an investor to buy them out 
C)  caught off-guard when a hospital offered to buy them out 
D)  none of these 
A)  caught off-guard when a rehabilitation center offered to buy them out 
B)  looking for an investor to buy them out 
C)  caught off-guard when a hospital offered to buy them out 
D)  none of these

Question 13

In the Flow Right Brewery & Bar case study, Chris was offered a buyout from:

Accepted Answer

A)  a venture capitalist 
B)  his ex-wife 
C)  his former boss 
D)  none of these 
A)  a venture capitalist 
B)  his ex-wife 
C)  his former boss 
D)  none of these

Question 14

The authors of our book advise the owners of a declining business to:

Accepted Answer

A)  pick the one key reason the business is declining and focus on fixing it 
B)  identify all the problems and hire a consultant to develop a turnaround plan 
C)  identify all the problems and focus first on the problem that will be the easiest to resolve 
D)  none of these 
A)  pick the one key reason the business is declining and focus on fixing it 
B)  identify all the problems and hire a consultant to develop a turnaround plan 
C)  identify all the problems and focus first on the problem that will be the easiest to resolve 
D)  none of these

Question 15

In the discounted future net cash flow valuation method, it is important that each party accept the underlying assumptions to determine a good estimation of a firm's value.

Accepted Answer

A) True 
 B)False

Question 16

Chapter 11 bankruptcy provides a fast-track option. Which of the following statements is NOT correct about this fast-track option?

Accepted Answer

A)  The fast-track plan provides creditors with far less control than in a larger organization's bankruptcy filing. 
B)  The fast-track plan must show how back taxes will be paid within five years. 
C)  The fast-track plan must show how creditors who have pledged collateral behind them will be brought current. 
D)  The fast-track plan must show that unsecured creditors will be paid first before other creditors. 
A)  The fast-track plan provides creditors with far less control than in a larger organization's bankruptcy filing. 
B)  The fast-track plan must show how back taxes will be paid within five years. 
C)  The fast-track plan must show how creditors who have pledged collateral behind them will be brought current. 
D)  The fast-track plan must show that unsecured creditors will be paid first before other creditors.

Question 17

The early start-up time is the best time to develop an exit strategy.

Accepted Answer

A) True 
 B)False

Question 18

Price/earnings ratio is a value derived by public companies that divides the current earnings per share of stock into the price per share of stock.

Accepted Answer

A) True 
 B)False

Question 19

A key retrenchment action that a declining business must make is to attempt an initial public auction.

Accepted Answer

A) True 
 B)False

Question 20

Which chapter of bankruptcy is used for a family-owned business?

Accepted Answer

A)  7 
B)  11 
C)  12 
D)  13 
A)  7 
B)  11 
C)  12 
D)  13

Why should a small business owner want to exit a business?

In the Tealuxe case study, the business filed for:

In the Friend's Home Health case study, the buyout offer was:

Which of the following methods of valuation takes the earnings (net profit) of an organization, and subtracts or adds in any unusual items that an investor feels are not customary?

In the Tealuxe case study, the founder:

In the Friend's Home Health case study, the founders:

Maintaining an estimate of value of a business as it grows and develops is the responsibility of the:

Perquisites for owners are given to maximize their benefits.

A decline in the performance of a business can generally be attributed to what factors?

Bankruptcy is an option for a small business owner if the turnaround effort does not succeed quickly enough.

According to the book, if a business owner's efforts to turn around the business fail, what is the best option?

In the Friend's Home Health case study, the founders were:

In the Flow Right Brewery & Bar case study, Chris was offered a buyout from:

The authors of our book advise the owners of a declining business to:

In the discounted future net cash flow valuation method, it is important that each party accept the underlying assumptions to determine a good estimation of a firm's value.

Chapter 11 bankruptcy provides a fast-track option. Which of the following statements is NOT correct about this fast-track option?

The early start-up time is the best time to develop an exit strategy.

Price/earnings ratio is a value derived by public companies that divides the current earnings per share of stock into the price per share of stock.

A key retrenchment action that a declining business must make is to attempt an initial public auction.

Which chapter of bankruptcy is used for a family-owned business?

Establishing the Legal Foundation

Financial Analysis

Financing and Accounting

Analyzing Cash Flow and Other Financial Information

Business Mission and Strategy

External Analysis

Business Idea Generation and Initial Evaluation

Individual Leadership and Entrepreneurial Start-Ups

Franchising and Purchasing an Existing Business

Establishing Operations

Marketing

Human Resource Management

The 21st Century Entrepreneur

Filters

Exam 13: Exit/Harvest/Turnaround

Why should a small business owner want to exit a business?

In the Tealuxe case study, the business filed for:

In the Friend's Home Health case study, the buyout offer was:

Which of the following methods of valuation takes the earnings (net profit) of an organization, and subtracts or adds in any unusual items that an investor feels are not customary?

In the Tealuxe case study, the founder:

In the Friend's Home Health case study, the founders:

Maintaining an estimate of value of a business as it grows and develops is the responsibility of the:

Perquisites for owners are given to maximize their benefits.

A decline in the performance of a business can generally be attributed to what factors?

Bankruptcy is an option for a small business owner if the turnaround effort does not succeed quickly enough.

According to the book, if a business owner's efforts to turn around the business fail, what is the best option?

In the Friend's Home Health case study, the founders were:

In the Flow Right Brewery & Bar case study, Chris was offered a buyout from:

The authors of our book advise the owners of a declining business to:

In the discounted future net cash flow valuation method, it is important that each party accept the underlying assumptions to determine a good estimation of a firm's value.

Chapter 11 bankruptcy provides a fast-track option. Which of the following statements is NOT correct about this fast-track option?

The early start-up time is the best time to develop an exit strategy.

Price/earnings ratio is a value derived by public companies that divides the current earnings per share of stock into the price per share of stock.

A key retrenchment action that a declining business must make is to attempt an initial public auction.

Which chapter of bankruptcy is used for a family-owned business?

Establishing the Legal Foundation

Financial Analysis

Financing and Accounting

Analyzing Cash Flow and Other Financial Information

Business Mission and Strategy

External Analysis

Business Idea Generation and Initial Evaluation

Individual Leadership and Entrepreneurial Start-Ups

Franchising and Purchasing an Existing Business

Establishing Operations

Marketing

Human Resource Management

The 21st Century Entrepreneur

Filters