BUA 342 Exam 1

The __________ ratio is traditionally used to measure a company's liquidity.

Current

A _________ identifies the characteristics necessary to locate and describe potential customers.

Customer Profile

A new business should not expect to exceed the __________ in profit margins.

Industry Average

Businesses that do not attract investors, but allow their owners to live the way they want to live are called ________businesses.

Lifestyle

___________ involves taking the steps necessary to locate and describe potential customers.

Market Analysis

____________ are expenses that remain constant at different levels of quantity sold.

Operating Expenses

The main difference between lifestyle business owners and entrepreneurs is the way they perceive .

Opportunity

New businesses often find it necessary to_______ when the original idea is found to have flaws.

Pivot

The single most important planning document for a small company's survival is

The Cash Budget

Current assets are also known as:

Working Capital

Entrepreneurs who start and lead small businesses contribute to the economy in which of the following ways?

a. They make up the overwhelming majority of all businesses. b. They hire nearly half of all high-tech employees. c. They are increasingly going global, representing 97 percent of all exporters. d. All of the above. ANSWER

Spotting trends can come from all of the following EXCEPT:

a. Tinkering with products features alone ANSWER b. Listening to customers c. Joining social media groups d. Using focus groups

The most effective strategy for a newcomer to use when entering a market is:

a. To undercut the competition on price.

A price-skimming strategy is best directed at what kind of customers?

d. Early adopters

In ___________ accounting, transactions are reported when they actually occur.

Cash-Basis

A__________ is a preliminary look at how well a business might do if it were opened.

Feasibility Analysis

The number that results when taxes are subtracted from profits (before taxes) is called ____________ and represents money that can be reinvested in the firm or paid out to owners (assuming enough cash is on hand).

Net Profits

What is the contribution margin for a product that sells for $5 per unit and has total variable costs of $2.75 per unit?

a. $2.25

Which of the following marketing philosophies is likely to lead to success in many areas, not just marketing?

a. Consumer-oriented

Small companies are particularly adept at competing with larger companies when they focus on:

a. Customer service.

Which of the following is the result of a firm having sufficient net working capital?

a. It indicates an ability to pay debt commitments as they come due.

While a focused strategy has its advantages, it can also lead to:

a. Market diffusion through unrelated diversification. b. B and C. ANSWER c. Overspecialization, resulting in too few customers. d. Competition from other firms attacking the same niche.

The "hockey stick" sales forecast is best described as:

a. Projections that start out flat then skyrocket unrealistically.

What is the break-even point in units of a company that sells widgets with a contribution margin of $3 and total fixed costs of $3000?

b. 1000 units

Ideas based on selling existing products or services in a new context are called:

c. New market ideas.

Pricing has a dual effect on total sales revenue. Which of the following best describes those effects?

c. Pricing has a direct impact on the gross revenue equation and an indirect impact on demand.

Which of the following is the most frequent source of new ideas for a business?

c. Prior work experience

The best definition of cost of goods sold is:

d. Expenses associated directly with the production of products and/or services.

Which of the following is NOT an element of SWOT analysis?

d. Obligations

The chief benefit of a marketing plan is:

d. To reduce the number of costly errors you make in your marketing.

Profits are not the same as cash flows because:

c. They are calculated on an accrual rather than a cash basis.

________are entrepreneurs who make contractual arrangements with established business chains rather than doing everything themselves.

Franchisers

_______ is the term used to describe specific knowledge and/or abilities that enable a firm to uniquely and exclusively offer a particular benefit to a customer.

Intellectual Property

A _________ strategy is used when a firm wants to enter the market at a price lower than its normal, long-range market price in order to gain rapid market entry.

Penetration Pricing

Stating the assets-to-sales relationship as a ratio is called the _________ technique.

Percentage of Sales

Juanita wants to know whether her new hair products business will be profitable. So far, she has made them at home in her basement. Now she wants to open a small retail space and make them in the back room of the store. She estimates that each jar of product will cost $5.00 to make and can be sold at a price of $7.00. What can Juanita safely conclude so far about her financial projections?

She can make money, but she still needs to calculate her projected sales volume to see if she can pay her other expenses.

The demise of Blockbuster Video stemmed from which of the following vulnerabilities?

a. New entrants changed the industry's way of doing things. b. They stuck to an old, established way of doing business instead of innovating. c. Management failed to take into account the increasing feasibility of delivering video online. d. All of the above played a part in their demise. ANSWER

Which of the following is NOT one of the three main financial statements?

a. Statement of Changes in Owners' Equity

Liquidity can also be described as:

a. The availability of cash to meet maturing debt obligations.

Which of the following is NOT a purpose of developing pro forma financial statements?

b. Defining the demographic that will describe most customers

Entrepreneurs generally think differently about resources than do employee-managers in which of the following ways?

b. Managers want larger budgets; entrepreneurs work to do more with less.

The fundamental benefit a customer gains from a product or service is called:

b. The core product/service.

Which of the following statements is NOT one of the desirable traits of entrepreneurs listed by Spinelli and Adams?

c. A domineering attitude

A sales forecast can best be described as:

c. A fact-based prediction of the best, worst, and most-likely sales levels of a business.

Which of the following is MOST descriptive of entrepreneurial passion?

c. An entrepreneur must have passion, but unchecked passion can be destructive.

The greater a firm's sales, the greater the asset requirements and thus the greater its financing requirements. Another way of saying this is:

c. The need for additional assets, including current assets (cash, inventory, and accounts receivable) and sometimes long-term assets such as (buildings, equipment, etc.), accompanies higher sales. These assets require taking on debt to purchase tangible items or to buffer cash flow fluctuations.

The function of an aging schedule is:

c. To categorize accounts receivable based on the length of time they have been outstanding.