Question 1

An above average inventory turnover indicates that the business:

Accepted Answer

A) has an illiquid inventory. 
B) is healthy,with a salable inventory. 
C) needs to review its pricing policies. 
D) has below average performance and is facing bankruptcy if not corrected quickly. 
A) has an illiquid inventory. 
B) is healthy,with a salable inventory. 
C) needs to review its pricing policies. 
D) has below average performance and is facing bankruptcy if not corrected quickly.

Question 2

To prepare the cash flow statement,the owner must assemble the balance sheets and the income statements summarizing the present year's operations.

Accepted Answer

A) True 
 B)False

Question 3

Depreciation is:

Accepted Answer

A) the difference between the total sources available to the owner and the total uses of those assets. 
B) listed as a source of funds because it is a noncash expense,deducted as a cost of doing business. 
C) the owner's total investment at the company's inception plus retained earnings. 
D) creditors' total claims against the firm's assets. 
A) the difference between the total sources available to the owner and the total uses of those assets. 
B) listed as a source of funds because it is a noncash expense,deducted as a cost of doing business. 
C) the owner's total investment at the company's inception plus retained earnings. 
D) creditors' total claims against the firm's assets.

Question 4

Calculating ratios is not enough to insure proper financial control.

Accepted Answer

A) True 
 B)False

Question 5

The statement of cash flows shows the change in a firm's working capital.

Accepted Answer

A) True 
 B)False

Question 6

________ are those items of value the business owns;________ are those things the business owes.

Accepted Answer

A) Assets;liabilities 
B) Liabilities;assets 
C) Ratios;equities 
D) Equities;liabilities 
A) Assets;liabilities 
B) Liabilities;assets 
C) Ratios;equities 
D) Equities;liabilities

Question 7

The quick ratio is the most commonly used measure for a small firm's short-term solvency.

Accepted Answer

A) True 
 B)False

Question 8

________ ratios measure the financing supplied by business owners and that supplied by the firm's creditors.

Accepted Answer

A) Leverage 
B) Profitability 
C) Liquidity 
D) Operating 
A) Leverage 
B) Profitability 
C) Liquidity 
D) Operating

Question 9

All costs directly related to the manufacture and distribution of goods is covered under general expenses.

Accepted Answer

A) True 
 B)False

Question 10

The rule for the balance sheet is:

Accepted Answer

A) Assets = Liabilities + Owner's Equity 
B) Assets - Liabilities = Owner's Equity 
C) Liabilities = Assets - Owner's Equity 
D) All of the above 
A) Assets = Liabilities + Owner's Equity 
B) Assets - Liabilities = Owner's Equity 
C) Liabilities = Assets - Owner's Equity 
D) All of the above

Question 11

________ publishes Annual Statement Studies,showing ratios and other financial data for over 750 different industrial,retail,and wholesale categories.

Accepted Answer

A) Robert Morris Associates 
B) Boston Consulting Group 
C) Bank of America 
D) Dun and Bradstreet,Inc. 
A) Robert Morris Associates 
B) Boston Consulting Group 
C) Bank of America 
D) Dun and Bradstreet,Inc.

Question 12

How can the entrepreneur interpret and use the various business ratios available to him/her?

Accepted Answer

To benefit from ratio analysis,the small

Question 13

The quick ratio is sometimes called the working capital ratio.

Accepted Answer

A) True 
 B)False

Question 14

Identify and explain the two profitability ratios a small business owner can use to measure how effectively he/she is managing the business.

Accepted Answer

Profitability ratios indicate how effici

Question 15

Most small businesses prefer to express their break-even point in dollars rather than units produced or sold,unless they are retailing.

Accepted Answer

A) True 
 B)False

Question 16

The formula for calculating net profit margin is net profit/net sales (annual).

Accepted Answer

A) True 
 B)False

Question 17

When a firm's ratios vary from the average ratios of similar firms in the industry,this indicates that the small business is in financial jeopardy.

Accepted Answer

A) True 
 B)False

Question 18

Many business owners whose companies are losing money mistakenly believe that the problem is inadequate sales volume;therefore,they focus on pumping sales at any cost.

Accepted Answer

A) True 
 B)False

Question 19

In the balance sheet,intangible assets include items such as:

Accepted Answer

A) goodwill. 
B) copyrights and patents. 
C) Both A and B 
D) accounts receivable. 
A) goodwill. 
B) copyrights and patents. 
C) Both A and B 
D) accounts receivable.

Question 20

The first step in preparing a break-even analysis is to break business expenses down into "fixed" and "variable" categories.

Accepted Answer

A) True 
 B)False

Exam 7: Creating a Solid Financial Plan

An above average inventory turnover indicates that the business:

To prepare the cash flow statement,the owner must assemble the balance sheets and the income statements summarizing the present year's operations.

Depreciation is:

Calculating ratios is not enough to insure proper financial control.

The statement of cash flows shows the change in a firm's working capital.

________ are those items of value the business owns;________ are those things the business owes.

The quick ratio is the most commonly used measure for a small firm's short-term solvency.

________ ratios measure the financing supplied by business owners and that supplied by the firm's creditors.

All costs directly related to the manufacture and distribution of goods is covered under general expenses.

The rule for the balance sheet is:

________ publishes Annual Statement Studies,showing ratios and other financial data for over 750 different industrial,retail,and wholesale categories.

How can the entrepreneur interpret and use the various business ratios available to him/her?

The quick ratio is sometimes called the working capital ratio.

Identify and explain the two profitability ratios a small business owner can use to measure how effectively he/she is managing the business.

Most small businesses prefer to express their break-even point in dollars rather than units produced or sold,unless they are retailing.

The formula for calculating net profit margin is net profit/net sales (annual).

When a firm's ratios vary from the average ratios of similar firms in the industry,this indicates that the small business is in financial jeopardy.

Many business owners whose companies are losing money mistakenly believe that the problem is inadequate sales volume;therefore,they focus on pumping sales at any cost.

In the balance sheet,intangible assets include items such as:

The first step in preparing a break-even analysis is to break business expenses down into "fixed" and "variable" categories.

Entrepreneurs: the Driving Force Behind Small Business

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Managing Cash Flow

Building a Guerrilla Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

Ethics and Social Responsibility: Doing the Right Thing

The Legal Environment: Business Law and Government Regulation

Filters

are those items of value the business owns; are those things the business owes.