Exam 7: Creating a Solid Financial Plan

A total assets turnover ratio below the industry average may indicate that the small firm is not generating an adequate sales volume for its asset size.

The break-even analysis provides an opportunity for integrated analysis of sales volume,expenses,income,and other relevant factors.

What is the difference between price per unit and variable cost per unit?

Typically,slow payers represent great risk to many small businesses.

The ________ ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities.

The ________ shows what assets the business owns and what claims creditors and owners have against those assets.

A new business owner must operate for at least six months in order to collect sufficient information to calculate net sales from a profit target.

________ measure the financing supplied by the company's owners against that supplied by its creditors and serve as a gauge of the depth of a company's debt.

A low inventory turnover ratio demonstrates that the firm's inventory is liquid and its pricing policies are accurate.

________ is/are the value of the owner's investment in the business.

The difference between the total sources of funds and the total uses of funds represents the increase or decrease in a firm's working capital.

The balance sheet takes a "snapshot" of a business,providing owners with an estimate of the firm's worth on a given date.

Joe is examining the percentage of total funds in a business provided by its creditors.He is working with the ________ ratio.

The average inventory turnover ratio tells the owner how fast merchandise is moving through the business.

The small firm's income statement presents a picture of the firm's profitability at a particular point in time.

An adequate profit in a small business must include a reasonable return on the owner's total investment in the business.

Liquidity ratios measure the financing supplied by the firm's owners against that provided by its creditors.

The ________ ratio measures the small company's ability to generate sales in relation to its assets.

Proper financial management requires more than gathering financial data and organizing it into financial statements;the small business manager must analyze those statements and use that information to make better business decisions.

The balance sheet provides owners with an estimate of the firm's worth for a specific moment in time.