Question 1

List the 12 key ratios outlined in the text and explain the type of information they provide the small business owner.

Accepted Answer

Students should select from the followin

Question 2

Refer to the following information Smith Office Supply Industry Mean
Current ratio 2.3 1.8
Quick ratio .4 .8
Average inventory turnover 2.0 3.9
Net sales-to-working capital 4.0 7.8
Debt-to-net worth ratio 3.0 1.7
Net profit to equity ratio 40.1 percent 22.2 percent
Which of the following statements is most likely false?

Accepted Answer

A) Smith relies heavily on inventory to meet its debt obligations. 
B) Smith is sufficiently capitalized. 
C) Smith's sales are inadequate. 
D) Smith's prices may be too high and/or the inventory too "stale." 
A) Smith relies heavily on inventory to meet its debt obligations. 
B) Smith is sufficiently capitalized. 
C) Smith's sales are inadequate. 
D) Smith's prices may be too high and/or the inventory too "stale."

Question 3

Create a break-even chart for Harry.

Accepted Answer

The answer of Create a break-even chart for Harry....

Question 4

Taking on debt destroys a business; therefore,small business owners should avoid it at all costs.

Accepted Answer

A) True 
 B)False

Question 5

According to one study,only 11 percent of small business owners analyzed their financial statements as part of the managerial planning process,and another study found that one-third of all entrepreneurs run their companies without any kind of financial plan.

Accepted Answer

A) True 
 B)False

Question 6

A business that turns over its receivables 5.9 times a year would have an average collection period of about:

Accepted Answer

A) 30 days. 
B) 2/10,net 30. 
C) 71 days. 
D) 62 days. 
A) 30 days. 
B) 2/10,net 30. 
C) 71 days. 
D) 62 days.

Question 7

Gaither Mack is preparing projected financial statements to include in the business plan he is preparing for the launch of a specialty retail store.Using published financial statistics,Mack finds that the typical net profit margin for a store like his is 7.3 percent.If Mack's target income for his first year of operation is $32,000,what level of sales must he achieve to reach it?

Accepted Answer

A) $233,600 
B) $438,356 
C) $2,966,400 
D) Cannot be determined from the information provided 
A) $233,600 
B) $438,356 
C) $2,966,400 
D) Cannot be determined from the information provided

Question 8

Pro forma financial statements show a company's most recent financial position.

Accepted Answer

A) True 
 B)False

Question 9

The statement of cash flows:

Accepted Answer

A) compares costs and expenses against firm's net profits. 
B) is built on the basic accounting equation: Assets = Liabilities + Capital. 
C) shows what assets the business owns and what claims creditors and owners have against those assets. 
D) shows changes in working capital by listing sources and uses of funds. 
A) compares costs and expenses against firm's net profits. 
B) is built on the basic accounting equation: Assets = Liabilities + Capital. 
C) shows what assets the business owns and what claims creditors and owners have against those assets. 
D) shows changes in working capital by listing sources and uses of funds.

Question 10

Port Royal's debt-to-net worth ratio is:

Accepted Answer

A) 0.36:1. 
B) 0.08:1. 
C) 1.57:1. 
D) 0.57:1. 
A) 0.36:1. 
B) 0.08:1. 
C) 1.57:1. 
D) 0.57:1.

Question 11

Small businesses with high leverage ratios are more vulnerable to economic downturns,but they have greater potential for large profits.

Accepted Answer

A) True 
 B)False

Question 12

In start-up firms,one guideline is for the owner to draw a salary 25-30 percent below the market rate for a similar position.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) High liquidity; high leverage 
B) Low liquidity; high leverage 
C) High liquidity; low leverage 
D) Low liquidity; low leverage 
A) High liquidity; high leverage 
B) Low liquidity; high leverage 
C) High liquidity; low leverage 
D) Low liquidity; low leverage

Question 14

The area labeled ________ is the "loss are a."

Accepted Answer

A) W 
B) X 
C) Y 
D) Z 
A) W 
B) X 
C) Y 
D) Z

Question 15

Service companies spend the greatest percentage of their sales revenue on cost of goods sold.

Accepted Answer

A) True 
 B)False

Question 16

To determine net profit,the owner records sales revenue for the year and subtracts liabilities.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following associations is correct?

Accepted Answer

A) Balance sheet - cost of goods sold 
B) Income statement - owner's equity 
C) Current assets - inventory 
D) Long-term liabilities - accounts payable 
A) Balance sheet - cost of goods sold 
B) Income statement - owner's equity 
C) Current assets - inventory 
D) Long-term liabilities - accounts payable

Question 18

The area labeled ________ is the "profit are a."

Accepted Answer

A) W 
B) X 
C) Y 
D) Z 
A) W 
B) X 
C) Y 
D) Z

Question 19

Help Jim compute the break-even point for his brake service.

Accepted Answer

Contribution margin:

Question 20

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

Accepted Answer

Pro forma statements are vital elements

List the 12 key ratios outlined in the text and explain the type of information they provide the small business owner.

Create a break-even chart for Harry.

Taking on debt destroys a business; therefore,small business owners should avoid it at all costs.

According to one study,only 11 percent of small business owners analyzed their financial statements as part of the managerial planning process,and another study found that one-third of all entrepreneurs run their companies without any kind of financial plan.

A business that turns over its receivables 5.9 times a year would have an average collection period of about:

Pro forma financial statements show a company's most recent financial position.

The statement of cash flows:

Port Royal's debt-to-net worth ratio is:

Small businesses with high leverage ratios are more vulnerable to economic downturns,but they have greater potential for large profits.

In start-up firms,one guideline is for the owner to draw a salary 25-30 percent below the market rate for a similar position.

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

The area labeled ________ is the "loss are a."

Service companies spend the greatest percentage of their sales revenue on cost of goods sold.

To determine net profit,the owner records sales revenue for the year and subtracts liabilities.

Which of the following associations is correct?

The area labeled ________ is the "profit are a."

Help Jim compute the break-even point for his brake service.

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

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters

Exam 11: Creating a Successful Financial Plan

List the 12 key ratios outlined in the text and explain the type of information they provide the small business owner.

Create a break-even chart for Harry.

Taking on debt destroys a business; therefore,small business owners should avoid it at all costs.

According to one study,only 11 percent of small business owners analyzed their financial statements as part of the managerial planning process,and another study found that one-third of all entrepreneurs run their companies without any kind of financial plan.

A business that turns over its receivables 5.9 times a year would have an average collection period of about:

Pro forma financial statements show a company's most recent financial position.

The statement of cash flows:

Port Royal's debt-to-net worth ratio is:

Small businesses with high leverage ratios are more vulnerable to economic downturns,but they have greater potential for large profits.

In start-up firms,one guideline is for the owner to draw a salary 25-30 percent below the market rate for a similar position.

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

The area labeled ________ is the "loss are a."

Service companies spend the greatest percentage of their sales revenue on cost of goods sold.

To determine net profit,the owner records sales revenue for the year and subtracts liabilities.

Which of the following associations is correct?

The area labeled ________ is the "profit are a."

Help Jim compute the break-even point for his brake service.

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

The Foundations of Entrepreneurship

Inside the Entrepreneurial Mind: From Ideas to Reality

Designing a Competitive Business Model and Building a Solid Strategic Plan

Conducting a Feasibility Analysis and Crafting a Winning Business Plan

Forms of Business Ownership

Franchising and the Entrepreneur

Buying an Existing Business

Building a Powerful Marketing Plan

E-Commerce and the Entrepreneur

Pricing Strategies

Managing Cash Flow

Sources of Financing: Debt and Equity

Choosing the Right Location and Layout

Global Opportunities

Building a Team and Management Succession

Filters