Exam 7: Creating a Solid Financial Plan

Which of the following expenses would likely be classified "semi-variable"?

Sales turnover ratio = Credit sales (or net sales)/Accounts receivable.

In reviewing the company's balance sheet,Andy noticed that the total asset is stated as $5,500,000 and the total liability is $3,250,000.There is no paid-in capital or value for common stock.What are the company's retained earnings?

The higher the ________ ratio,the lower the degree of protection afforded creditors and the closer creditors' interest approaches the owner's interest.

Bill is studying those expenses that contribute directly to manufacturing and distribution of goods.He's reviewing:

Concerning how much cash to have at start-up,a rule of thumb is to have enough to cover operating expenses (less depreciation)for two inventory turnover periods.

The current ratio can sometimes be misleading,because it does not show the quality of a company's current assets.

Performing financial ratio analyses enables a business owner to identify problems early-before they become crises.

Which of the following would be a sign that a company is overextended in its debt?

When comparing a company's ratios to industry standards,entrepreneurs should ask the which of the following questions:

In which statement,the account balances are reversed to zero on a monthly basis?

Fixed assets consist of cash and items to be converted into cash within one year or within the normal operating cycle of the company,whichever is longer.

Which of the following expenses would be considered "fixed"?

There is a direct 1:1 relationship between a company's expected average inventory turnover ratio and the amount of cash required to launch it.

What is the value of ratio analysis to the small business owner and what are the four categories of ratios he/she can use?

The pro forma shows the company's current overall financial condition.

A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:

As a company's debt-to-net worth ratio approaches 1:1,its creditors' interest in that business approaches that of the owners'.

On a break-even chart,the break-even point occurs at the intersection of the fixed expense line and the total revenue line.

John is reviewing the company's costs and expenses against revenue for the last year.John is reviewing the firm's: