Quiz 5

Fixed operating expenses include all of the following except:

C) Raw Materials A. Rent B. Property Taxes C. Raw Materials D. Depreciation

________ financing entails obtaining funds for the company in exchange for ownership

Equity

Equity Financing Requires Collateral

False

Large positive cash flows usually occur in the first months of a new venture

False

The funds for a SBA guaranteed loan are provided by the federal government

False

________ is the amount owners have invested and also what has been retained from the venture operations:

Owner's Equity

The most frequent used source of funds for start-ups is:

The entrepreneur's personal funds

The formula for break-even analysis is:

Total fixed costs / selling price - variable cost per unit

A balance sheet includes owner's equity in the firm

True

Extending payments to suppliers is an example generating funds internally

True

In a factoring arrangement, the bank lends the business money using accounts receivable as collateral.

True

In projecting cash flows the most difficult problem is in determining the exact amount of monthly receipts and disbursements.

True

Many profitable firms fail because of lack of cash

True

Most R&D limited partnerships are not successful

True

On an income statement, sales minus COGS equals net profit

True

Fixed assets are those that:

Will be used over a long period of time

The maximum amount that can be borrowed under an SBA 7(a) loan is:

$5,000,000

Proceeds from an SBA loan can be used for:

All of the above Working capital Machinery and equipment Furniture and fixtures all of the above

The basic balance sheet relationship is:

Assets equals liabilities plus owner's equity **(A-L=SHE)

Capital Budgets project expenditures on:

New Equipment