Question 1

The ________ shows the change in the firm's working capital since the beginning of the year.

Accepted Answer

A) balance sheet 
B) income statement 
C) pro forma 
D) statement of cash flows 
A) balance sheet 
B) income statement 
C) pro forma 
D) statement of cash flows

Question 2

The ________ ratio is a measure of the small company's ability to pay current debts from current assets.

Accepted Answer

A) debt-to-net worth 
B) current 
C) quick 
D) debt-to-assets 
A) debt-to-net worth 
B) current 
C) quick 
D) debt-to-assets

Question 3

Describe a pro forma statement,identifying the types of pro forma statements a small business owner could use,and how the small business owner would create each.

Accepted Answer

Pro forma statements estimate

Question 4

What does a break-even analysis tell the small business owner?

Accepted Answer

Business owners should know their firm's

Question 5

Since conditions and markets change so rapidly,entrepreneurs developing financial forecasts for start-ups should focus on creating projections for 6 months into the future.

Accepted Answer

A) True 
 B)False

Question 6

When determining the owner's target income,you must consider a reasonable salary for the time spent running the business,less the depreciation of assets.

Accepted Answer

A) True 
 B)False

Question 7

________ publishes key business ratios for over 800 business 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 8

________ are those things that a business owes;they represent creditors' claims against the business.

Accepted Answer

A) Assets 
B) Liabilities 
C) Owners' equities 
D) Liquidities 
A) Assets 
B) Liabilities 
C) Owners' equities 
D) Liquidities

Question 9

Which of the following is correct?

Accepted Answer

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

Question 10

________ ratios indicate how efficiently the small firm is being managed.

Accepted Answer

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

Question 11

The break-even point occurs where:

Accepted Answer

A) the firm's fixed expenses equal its variable expenses. 
B) the creditors' interest equals the owner's interest in the business. 
C) total revenue equals total expenses. 
D) assets and liabilities are equal on the balance sheet. 
A) the firm's fixed expenses equal its variable expenses. 
B) the creditors' interest equals the owner's interest in the business. 
C) total revenue equals total expenses. 
D) assets and liabilities are equal on the balance sheet.

Question 12

Projecting financial statements helps the small business owner to:

Accepted Answer

A) track and monitor current expenses. 
B) transform business goals into reality. 
C) calculate his/her return on the amount invested in the company. 
D) measure liquidity of the firm. 
A) track and monitor current expenses. 
B) transform business goals into reality. 
C) calculate his/her return on the amount invested in the company. 
D) measure liquidity of the firm.

Question 13

In the balance sheet,the current assets consist of:

Accepted Answer

A) accounts payable. 
B) inventory. 
C) revenue. 
D) All of the above 
A) accounts payable. 
B) inventory. 
C) revenue. 
D) All of the above

Question 14

The net profit on sales ratio (also called the profit margin on sales)measures the firm's profit per dollar of sales.

Accepted Answer

A) True 
 B)False

Question 15

When creating the pro forma income statement,the owner needs to translate the target profit into a net sales figure.To do this,the owner needs:

Accepted Answer

A) to operate the business for one to two years to build a record. 
B) published statistics for his/her specific type of business. 
C) to divide actual net sales by the net profit projected. 
D) a sales forecast,the amount of retained earnings,and current depreciation on assets. 
A) to operate the business for one to two years to build a record. 
B) published statistics for his/her specific type of business. 
C) to divide actual net sales by the net profit projected. 
D) a sales forecast,the amount of retained earnings,and current depreciation on assets.

Question 16

The ________ ratio is a measure of a company's ability to make the interest payments on its debt.

Accepted Answer

A) debt-to-net worth 
B) times-interest-earned 
C) net sales-to-working capital 
D) net profit-to-equity 
A) debt-to-net worth 
B) times-interest-earned 
C) net sales-to-working capital 
D) net profit-to-equity

Question 17

Most small businesses start out strong financially because of the care generally given in determining the total asset requirements for running the business.

Accepted Answer

A) True 
 B)False

Question 18

To calculate break-even sales,use the equation: break-even sales (in dollars)= total variable costs divided by contribution margin as a percentage of sales revenue.

Accepted Answer

A) True 
 B)False

Question 19

The net profit on sales ratio measures the owners' rate of return on the investment in the business.

Accepted Answer

A) True 
 B)False

Question 20

The net profit to equity ratio (or the return on net worth ratio)measures the owners' rate of return on investment.

Accepted Answer

A) True 
 B)False

Exam 7: Creating a Solid Financial Plan

The ________ shows the change in the firm's working capital since the beginning of the year.

The ________ ratio is a measure of the small company's ability to pay current debts from current assets.

Describe a pro forma statement,identifying the types of pro forma statements a small business owner could use,and how the small business owner would create each.

What does a break-even analysis tell the small business owner?

Since conditions and markets change so rapidly,entrepreneurs developing financial forecasts for start-ups should focus on creating projections for 6 months into the future.

When determining the owner's target income,you must consider a reasonable salary for the time spent running the business,less the depreciation of assets.

________ publishes key business ratios for over 800 business categories.

________ are those things that a business owes;they represent creditors' claims against the business.

Which of the following is correct?

________ ratios indicate how efficiently the small firm is being managed.

The break-even point occurs where:

Projecting financial statements helps the small business owner to:

In the balance sheet,the current assets consist of:

The net profit on sales ratio (also called the profit margin on sales)measures the firm's profit per dollar of sales.

When creating the pro forma income statement,the owner needs to translate the target profit into a net sales figure.To do this,the owner needs:

The ________ ratio is a measure of a company's ability to make the interest payments on its debt.

Most small businesses start out strong financially because of the care generally given in determining the total asset requirements for running the business.

To calculate break-even sales,use the equation: break-even sales (in dollars)= total variable costs divided by contribution margin as a percentage of sales revenue.

The net profit on sales ratio measures the owners' rate of return on the investment in the business.

The net profit to equity ratio (or the return on net worth ratio)measures the owners' rate of return on investment.

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