Management 350 Chapter 6

____________ is using low-cost or free techniques to minimize the cost of doing business.

bootstrapping

A _________ is the purchase of substantially less than 100% if a business.

buy-in

A ___________ is the purchase of substantially all of an existing business.

buyout

________ is the process of investigating a business to determine its value.

due diligence

The _________ is the ratio of the value of a firm to its annual revenues.

earnings multiple

_________ refers to the process of analyzing the resources available and creating a product or service from them.

bricolage

A _______________ is the value of the business in excess of the value of the identifiable assets.

business good will

_________ is determined by dividing income by the owners' equity.

net income to equity

_______________ is calculated by dividing projected net income excluding depreciation, interest, and other draws, by the best return expected in other investments.

income capitalization

A business' _____________ are its assets and liabilities that have no physical existence.

intangibles

A _____________ is a type of business transfer where the seller gets only a fraction of the value of the business.

sell off

A __________ is a type of business transfer where the owner gives the business to someone else without a payment.

pass off

People who open multiple businesses throughout his or her career are called __________ entrepreneurs.

serial

The _________ method reduces the value of the business' cash flow because they will be received in the future.

discounted cash flow

________________ is a commonsense rule or a rule of thumb.

heuristic

The vast major of start-ups are considered _________, where the idea is a common business in that community.

me too ventures

A ___________________ is the least version of the product that can be produced at a low cost and sod to customers in order to get feedback to improve upon the product.

minimum viable product

The Latin phrase ___________ ___________ means let the buyer beware.

cavaet emptor

_______________ is the practice of and ability to seize upon novel opportunities that become apparent during the conduct of business.

leverage contingencies

A _____________ is a form of business termination in which the firms legal or financial obligations are not fully met at closing.

workout

___________ is a combination in which the whole is greater than the sum of its component parts.

synergy

A ____________ is the seizing of control of a business by purchasing its stock to be able to select the board of directors.

takeover

A ____________ is an endgame strategy in which the owner closes down a business.

termination

One of the best predictors that a founder will be successful is ________________.

their level of experience

A __________ is an endgame strategy in which ownership is moved from one person or group to another.

transfer

T or F: The founder's early actions greatly increases the probability of running a successful start-up.

true

A ______________ is a business termination in which the entrepreneur ends his or her business with its obligations met.

walkaway

An __________ is something the business owns that is expected to have economic value in the future.

asset

A _____________ is an extreme form of business termination which uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets.

bankruptcy

____________ reasoning is a logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal.

effectual

An _________________ is a formalized legal method to transfer some or all of a business' ownership to its employees.

employee stock ownership plan (ESOP)

_____________ is an extension of net income to equity that explicitly includes the value of borrowed capital as a component of firm value.

net income to equity plus debt

Casual reasoning is also called __________ reasoning.

predictive

The __________ value is the cost to acquire an essentially identical asset.

replacement value

_____________ franchises are required to open a minimum number of stores within a specified time period.

master

According to Sarasvathy, what are the three critical principles in the effectual reasoning process?

leveraging of contingencies, strategic partnerships, affordable loss

Entrepreneurs who start-up a business from scratch will generally have to put up personal collateral in order to obtain a ____________ from a bank or credit union.

loan

UFOC stands for the uniform franchise ________ ________ and is a document that the franchiser must provide to each potential franchise.

offering circular

The _________ is the price at which a buyer is indifferent about buying or not buying a business.

point of indifference

The __________________ is calculated by dividing earnings before income tax by asset value.

pretax return on assets (ROA)

____________ is a credit agreement that allows a borrower to pay all or part of a loan's balance at any time.

revolving credit

A ____________ is a business that is created by separating part of an operating business into a separate entity.

spin off

A ___________ is a new business that is started from scratch.

start up