Exam 12: Creating a Successful Financial Plan

A business with a payables turnover ratio of 10.4 times a year would have an average payable period of about ________ days.

Which ratio would be most helpful to a business owner to measure the profit per dollar of sales?

If Anita's net profit target is $32,000, what level of net sales must she achieve?

Refer to the following information to answer the question(s)regarding Anita Lupino's toy and game shop: Anita Lupino is planning to open her own toy and game shop. She has conducted a great deal of research at the local library, contacted the industry trade association, and has set up a meeting with a consultant at the SBDC next week. Before she goes to the SBDC, she wants to sketch out an estimated income statement. She reviews the following data from RMA's Annual Statement Studies: Cost of Goods Sold 57.3 percent of net sales Operating Expenses 32.9 percent of net sales Gross Profit 42.7 percent of net sales -If Anita's research suggests that she can expect net sales of $475,000, what net profit could she expect?

________ is one indication that a small business may be undercapitalized.

Ratio analysis provides an owner with a "snapshot" of the company's financial picture at a single instant; therefore, (s)he should track these ratios over time, looking for trends that otherwise might go undetected.

If Harry's profit target is $15,000, what level of sales must be achieved?

Define what a pro forma financial statement is. What are the two types a small business owner uses, and how are they created?

The net-sales-to-total assets ratio is also referred to as the total asset turnover.

Why is it important for an entrepreneur, about to launch a business, to perform a break-even analysis? Describe the steps in calculating it.

On the income statement, the cost of goods sold represents the total cost, excluding shipping, of the merchandise sold during the year.

You are provided this information about a retail store called "BoardSports:" BoardSports Industry Mean Current Ratio 1.5 : 1 2: 1 Quick Ratio .75 : 1 1 : 1 Debt Ratio 0.87 : 1 0.75 : 1 Average Collection Ratio 46 days 33 days Net Profit on Sales Ratio 5.5% 8.2% Net Profit to Equity Ratio 7.7% 13.2% What can you reasonably assess about the current financial status of this company?

If the accounting period is one year with credit sales totaling $2,500,000 and accounts receivable totaling $200,000, the average collection period ratio is ________.

Which of the following combinations of ratios would indicate that a company is financially mismanaged and is not a good credit risk?

What are the advantages and the disadvantages of using break-even analysis?

The ________ shows what assets the business owns and what claims creditors and owners have against those assets, and is built on the basic accounting equation: Assets = Liabilities + Owner's Equity.

Although sound cash management principles call for a business owner to keep her/his cash as long as possible, slowing accounts payable too drastically can severely damage a company's credit rating.

Cost of goods sold is located on which financial statement?

Financial analysts suggest that a small business should maintain a current ratio of at least ________.

The net profit to asset ratio measures ________.