EXAM 2 Small Business Mgt 462

total asset turnover ratio

Which of the following is not a liquidity ratio?

True

Assets represent what a business owns, while liabilities represent the claims creditors have against a company's assets.

market research

Entrepreneurs can find the right match based on trends, their products or services, and the appropriate target markets through:

small companies; larger

Guerrilla marketing is a marketing approach that takes an unconventional, low-cost and creative approach to marketing that can give ______ a competitive edge over _____ competitors

all answers are correct

In a business sale, a letter of intent:

target market

One key to setting prices properly is based on understanding a company's

all answers are correct

The break-even point:

All answers are correct

The due diligence process of analyzing and evaluating an existing business

all answers are correct

The final price a business owner sets within the acceptable price range depends on:

boredom and burnout

The most common reasons owners of small and medium-sized businesses give for selling their businesses are:

brand

A _____ is a company's "face" in the marketplace and communicates a key message to the target market.

the time and money invested in the business

A business should provide the owner with a reasonable rate of return based upon:

triple

A business with a 25 percent gross profit margin that reduces its price by 10 percent would have to _______ its sales volume just to break even.

extra value, convenience, service, and quality they offer their customers

A common pricing mistake entrepreneurs make is lowering prices because they fail to recognize the:

the price of one share of its common stock divided by its earnings per share.

A company's P/E ratio is:

time compression management (TCM)

A marketing strategy that relies on three principles to speed product to market, shorten customer response times in manufacturing, and deliver and reduce the administrative time required to fill an order is:

balance sheet technique

A method of valuing a business based on the value of the company's net worth is the :

customized or dynamic pricing

A pricing technique that sets different prices on the same products and services for different customers using the information that a company collects about its customers is called:

odd pricing

A pricing technique that sets prices that always end in numbers like '99' for prices such as $9.99 and $19.99 is an example of ;

data mining

A process in which computer software that uses statistical analysis, database technology, and artificial intelligence finds hidden patterns, trends, and connections in data so that business owners can make better marketing decisions and predictions about customers behavior is known as:

60:35

A study by the Pew Internet and American Life Project reports that ______ percent of Americans research products and services online before buying them, and increase of _____percent in the year 2000.

ratio analysis

A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called

follow-the-leader

Although many retailers must match competitors'prices on identical items, maintaining a ______ pricing policy may not be healthy for a small business because it robs the company of the opportunity to create a distinctive image in its customers' eyes

all the above provide the opportunity for differentiaion

An entrepreneurial company can differentiate itself by creating a distinctive image in customers' minds or by offering:

the ability to understand the underlying business and to develop a workable business model

An important part of any e-commerce effort is:

$1,693,276

Gunther's Emporium expects net sales of $2,396, 919 for the upcoming year, with variable expenses totaling $1,813, 443 and fixed expenses of $412,190. what is Gunther's break-even point?

all the above

How can a company achieve stellar customer service and satisfaction?

False

On a break-even chart, the break-even point occurs at the intersection of the fixed expense line and the total revenue line.

the sum of a reasonable salary for the time spent running the business and a normal return on the amount invested in it.

On a projected income statement, a business owner's target income is:

skimming pricing strategy.

Once a company has invested time and money developing a unique new product, in order to recoup some of the high R&D costs, they will likely use a:

provide companies with instantaneous customer feedback

One of the most valuable attributes of the Web is the ability to

the successful Web site will include all of the above.

To be successful online, small companies must create Web sites with features that appeal to experienced Web shoppers, such as:

all answers are correct.

To ensure a smooth transition when buying an existing business, a buyer should

demographic

Tracking _____ patterns can enable entrepreneurs to adjust their strategies accordingly to better position them to take advantage of the opportunities these trends may create.

reveal both the positive and negative aspects of an existing business.

When done correctly, the due diligence process will:

discounted future earnings

Which method of business valuation relies on three forecasts of future earnings; optimistic, pessimistic, and most likely?

current assets - inventory

Which of the following associations is correct?

all answers are correct

Which of the following guerrilla marketing tactics allow a small company to utilize relationship marketing successfully?

all answers are correct

Which of the following is a disadvantage of the market approach to valuing a business?

All are correct

Which of the following is a potential disadvantage of purchasing an existing business?

all answers are correct

Which of the following is an important issue that business owners should consider before launching an e-commerce effort?

The privacy policy was not posted.

Which of the following is not a common reason customers leave Web sites before checking out?

all answers are correct are sources of primary market research

Which of the following is not a primary market research source?

seeing the customer's point of view

Which of the following is not a suggestion of a means of focusing on the customer

cost of goods sold represents the total cost, excluding shipping of the merchandise sold during the accounting period

Which of the following is not true regarding the components of the income statement?

Fixtures

Which of the following items would not be listed as a current asset in a company's financial reports?

all answers are correct

Which of the following statements about price is true?

A "shotgun approach" to marketing-trying to appeal to everyone rather than to only a small market segment - is the most effective way to compete with large companies and their bigger marketing budgets.

Which of the following statements concerning a company's target market is false?

The buyer should wait until late in the purchase process to arrange financing to avoid processing fees in case the deal falls through.

Which of the following statements concerning financing the purchase of an existing business is not true?

The buyer should be able to make the payments on the loans out of the company's cash flow.

Which of the following statements concerning financing the purchase of an existing business is true?

discounted future earnings approach

Which of the following valuation techniques is best suited for determining the value of service businesses?

The company is in poor financial condition with significant changes required.

You are provided this information about a retail store called "BoardSports." BoardSports Industry mean Current Ratio 1.5:1 2:1 Quick ratio .75;1 1:1 Debt ratio .87;1 0.75;1

leader pricing

Your local grocery store uses a pricing technique known as _____ on a weekly basis, in which they mark down the price of several popular items, sometimes well below their normal price, in an effort to increase customer traffic and to boost sales of other items.

objective; perceived

_____ value is the price customers would be willing to pay if they perfectly understood the benefits offered, while _______ value is what determines the price they are willing to pay.

Assets; liabilities

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

A debt-to-net worth ratio above 1:1

______ is one indication that a small business may be undercapitalized.

Marketing

______ is the process of creating and delivering desired goods and services to customers and involves all of the activities associated with winning and retaining loyal customers.

Penetration

______ pricing strategies work best in markets where no "elite" segments exist or in highly competitive markets where similar products are trying to gain a foothold.

leverage

______ ratios measure the extent to which an entrepreneur relies on debt capital rather than equity capital to finance a business.

leader

_________ pricing is a technique that involves marking down the normal price of a popular item in an attempt to attract more customers who make incidental purchases of other items at regular prices.

liquidity

___________ ratios tell whether or not the small company will be able to meet its short-term obligations.

High Prices

_____frequently convey the idea of quality, prestige, and uniqueness to customers.

balance sheet technique

which of the following valuation methods does not consider the future income-earning potential of a business?

the average inventory turnover

Cash requirements can be determined by dividing cash expenses by:

all answers are correct

Successful marketing requires a business owner to:

quick

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.

balance sheet; income statement

The _______ represents a "snapshot" of a business, showing an estimate of its value on a given date while the _______ is a "moving picture " of the firm's profitability over time.

also critically important for a company's presence on the Web.

Building a Web strategy based on a clear definition of the company's target audience and an understanding of those customers' need, wants, likes, and dislikes is:

they do not consider the future earning potential of the business.

Business valuations based on balance sheet methods suffer certain disadvantages, including:

all the above

Businesses facing rapidly rising costs should consider:

establishing long-term relationships with suppliers

Companies with strong reputations for quality follow certain guidelines, such as:

All answers are correct

Creating projected (pro forma) financial statements would allow a business owner to answer which of the following questions?

purchase agreement

During the acquisition process, the buyer and the seller sign a _____, which spells out the parties' final deal and represents the details of the agreement that are the result of the negotiation process.

covenant not to compete

During the acquisition process, the potential buyer usually must sign a ______, which is an agreement to keep all conversations and information secret and legally binds the buyer from telling anyone any information the seller shares wit her.

Privacy and site security is an important issue on the web.

Entrepreneurs should make sure they do not fall victim to any of the e-commerce myths. Which of the following is not an e-commerce myth?

False

Fixed expenses are those that do not vary with changes in the volume of sales, but do vary with production.

the average for the industry and the firm's credit terms

For the most meaningful interpretation, the small business owner should compare his firm's average collection period to:

lower cost structures

Generally, entrepreneurs should avoid head-to-head price competition with other time that can more easily achieve lower prices through:

Smith is sufficiently capitalized

Refer to the following information Smith Office Supply Industry Mean Current ratio 2:3 1:8

guerrilla marketing strategies

Small businesses can compete with larger rivals with bigger budgets by employing unconventional, low-cost creative techniques known as:

errors and omissions

Sources of potential legal liabilities for the buyer of an existing business include all but which of the following?

demographics

Studies of shifting patterns in age, income, education, race, and other population characteristics are the subject of:

all of these factors enhance a Web-based reputation

Successful e-tailers have discovered that these factors enhance their reputations for online customer service:

All answers are correct

The average inventory turnover ratio:

True

The break-even point is the level of operation at which a business neither earns a profit nor incurs a loss, and lets the business owner know the minimum level of activity required to keep the firm in operation.

its future income and profits for earning potential

The main reason a buyer purchases an existing business is for:

niche marketing

The marketing approach that is most effective today for a small business is:

all answers are correct

The most common reasons for leaving a site without purchasing include which of the following?