Exam 10: The Power of Numbers

Your financial plan will begin with you and your financial fitness and vision.

To calculate your break-even point, you need to know the value of your fixed and variable costs and your output capacity.

What amount of net profit would an owner require if he or she wanted to achieve a profit margin of 45 percent of every $100 worth of sales?

The gross margin return on inventory investment (GMROI) measures the gross margin earned on the invested inventory. This ratio takes into consideration both gross profit and __________________.

The number of times each year that a company turns over or replaces its inventory is called ________ ___________.

The equity-to-debt ratio is calculated by dividing current assets by current liabilities.

A balance sheet balances because assets equal ______ plus __________.

Total sales minus cost of goods sold is called __________ __________.

Which of the following is most important when you start a new business?

Current assets divided by current liabilities is called the __________ ________________.

A pro forma income statement will tell you how much cash you have to operate your business.

The point at which your sales revenue equals your total costs is your _______________ ______________.

A cash flow projection tells you whether you can pay the bills and when you might have to borrow money from the bank.

How would you calculate cash on hand at the end of the month in a cash flow statement?

As described in the Chapter 10 case study, what represented the first step to financial freedom for Ray and Joan Stewart?

A bed-and-breakfast inn has a much different cash flow situation than a service trade business like plumbing or carpentry.

Please explain why working capital is not necessarily cash.

What is the term for the ability of a company to pay its short-term obligations?

As a rule of thumb, what number should debt-to-equity ratios be less than?

Which of the following would you use on an application of funds statement?