ENT FINALS REVIEWER

Depreciation

A figment of the imagination of the accountant and is not really a part of the funds flow

Common size

A format that Involves translating all the financial figures over TWO OR MORE YEARS in common or percentage

Hire people

After establishing the enterprise, the entrepreneur must___

Assets

Always balance the liabilities

Existing products

Are being tolerated because there are enough features and attributes to make the customers want to buy the product

Financial statements

Are nothing but abstractions of all the business transactions going on in an enterprise

Patents

Are payments to holders of an invention or technology

Angel Industrial Partners

Are people who can contribute their expertise, experience, technology, contacts and good character that will enable the enterprise to succeed

Loans

Are sources of funds and put into use in the form of cash

Current assets

Are those convertible to cash within a relatively short period of time

25

At least ____ % of the authorized capital must be subscribed to by stockholders at the time of incorporation

Unpaid sales

Become accounts receivable

Interest Payable

Can be computed by estimating the short and long-term loans needed for the period being forecasted

Inventory turnover

Can be computed using past sales or COST OF SALES AS THE NUMERATOR and PAST INVENTORIES AS THE DENOMINATOR

Analyzing financial statements

Can give very powerful insights into how an enterprise is conducting itself

Marketable securities

Cash beyond the minimum required balance can be placed in ___

Non-operating income

Comes from transactions not connected with the main business of the enterprise

Organizational Expenses

Comprise feasibility studies, enterprise promotion activities, pre-operating expenses, and other set-up costs

Creative Mind

Conceptualizes and designs a product that consumers find some use for; produces a product that is pleasing to the senses and creates emotional attachments and becomes a significant personal expression of the consumer

T account

Divides the left side from the right side of the fund container

Purposes of a Business Plan

Entice partners, investors, and bankers to fund a business venture. Communicate what the enterprise is all about, what market it wants to serve. Show what financial returns it could muster

Cost of goods sold

From finished goods they would become

Work in process

From the raw materials, we will convert them into____

Raw materials

From the suppliers' credit container

Finished goods

From work in process, we will convert them into___

Funds flow

Funds that are going from one circle to another circle

Corporation

Has a separate legal personality quite distinct from the investors who contributed money to the enterprise. Can own its own assets, can incur its own liabilities, and can sue and get sued. Can be formed or incorporated by, at least five, or at most 15 natural persons. Once the corporation is established, there is no limit to the number of natural or juridical persons who can invest in the

Technology Renderer

He or she resolves to make a new product work for the product creator by configuring and reconfiguring the technical design of the new product

Technology Adaptor

He or she uses old knowledge for new applications in various fields of human endeavour

Gross profit

If one subtracts Cost of Goods Sold from the Sales figure, one obtains the ____

Net cash inflow

If the cash inflows are greater than the cash outflows

Net cash outflow

If the cash outflows are greater than the cash inflows

Beginning Cash Balance, Ending Cash Balance

If there are projected surpluses or shortages, these should be added to ____ to determine the ____

Non-operating expenses

Include interest expenses on short and long-term loans, losses incurred in the sale of assets or marketable securities etc.

Transacted

Income statement recognizes sales when they are___, not when they are collected

Corporation Sole

Is a special form of corporation allowed by law, usually associated with the clergy.Is a trusteeship that is set up for the purpose of administering and managing the affairs, property, and temporalities of a church or group of clergy

Entrepreneur or Finance manager

Is concerned about the enterprise's survival on a day-to-day basis as well as its long-term sustainability

Financial forecasting

Is popular among entrepreneurs who know their business inside out; Is just rendering into numbers of the assumptions that entrepreneurs make about how their sales will move.

Goodwill

Is the premium paid by the enterprise for an asset or share of stock whose book value is lower than the purchase or acquisition price

Technology Originator

Is what drives him or her to convert new knowledge into something highly functional and operational

Stock Corporation

Issues capital stocks divided into shares or proportions of the total capital

Average Accounts Receivables Collection Period

It approximates the average age of accounts receivables or how long it usually takes to collect from customers who bought goods using credit

company name

It communicates what the products and company is all about and it must project its very desired image.

Inventory Turnover Ration

It focuses on the inventories of the enterprise in relation to the sales generated or the cost of goods sold

Business Mind

It harnesses the potentials of new products by creating the market space for them; It also organizes sufficient forces and resources to develop, launch and commercialize the new product in order to maximize its market value

Very Good Business Plan

It is a wise thing to do in order to chart the course of the business properly and to focus the efforts of the entrepreneur

Current Ratio

It is simply the ratio between current assets and current liabilities

Double entry accounting

It is the basis for the entire construction of the financial statement

Close Corporation

It limits the ownership of issued stocks to at most 20 persons. The stocks cannot be listed in any stock exchange nor can any public offering of shares be made

Asset turnover ratio

It measures how much sales are generated by the assets of the enterprise

Cost of Goods Sold

It reflects the cost of making the product itself or of delivering the services directly to the customers (Cost of Sales)

Fixed assets

Led by land, which is the most saleable among them

Liability

Long term debt

Good character and competence

Must be the two major criteria for hiring people

Income statement

One of the most easily understood financial statements

Cash budget

Only recognizes cash collections from sales made

Cash Position Forecast

Other term for funds flow forecast

Profit and loss statement

Other term for income statement

Liability

Owner's equity

Angel Investors

Provide capital to entrepreneurs knowing that there are risks involved. They are prepared to support the entrepreneur because of the good business prospects they are seeing and their favourable character assessment of the entrepreneur

Forecasting fixed assets

Requires an assessment of the enterprise's future requirements for land, building, machinery, equipment, furniture, fixtures and other long lasting assets

Cash flow forecast

Should indicate whether excess cash is likely to accumulate

Non

Stock Non-Profit Corporation - Is organized to carry out a purpose other than generating profits for investors. Is governed by its Board of Trustees who are chosen and replaced according to the provisions of the Articles of Incorporation and the accompanying By-Laws.

Financial statements

Summarize what is going to happen to the business if plans are carried out well

Quick ratio

Takes only the very liquid current assets composed of cash

Depreciation

The accountant will concoct an account called ___

Long term debt-to-owners' equity ratio

The analyst may only be interested in the _____, particularly if he or she is comfortable that current assets can meet the payment schedule for current liabilities

Total debt-to-owners' equity ratio

The bigger the ____, the more financial exposure and risk the enterprise has

Business concept and the vision for the enterprise

The business plan should begin with the ___

Executive Summary

The business plan should contain a/an ___ of the following:The organizers and the key people behind the business and why these people have the resources, talents, skills, and technology to achieve success; The market being targeted and why there is enough market potential to justify the business; The products or services to be offered and why they are right for the market; How the business will be operated and organized, including all outsourcing, subcontracting, franchising, and licensing agreements; The investment capital required for the business and what exactly it would be used for; The technology, the technical expertise, the equipment, and materials suppliers to be utilized; The capital structure (short and long term debt, stockholders' equity) of the business; The operating budget, financial projections (income statement, balance sheet, cash flow), and return on investment prospects; The risks in the business and the contingency measures to counteract them

Government Readers

The business plan should provide compliance statements with all laws and regulatory provisions.

Time series analysis

The comparative analysis over several years (horizontal analysis)

Product cost

The cost of making the product becomes the ___

Very Compelling Vision

The entrepreneur must establish an enterprise on the basis of a very exciting business concept leading to a grand vision. The entrepreneur must offer something new, something appealing, something different. The entrepreneur must present a winning business concept that manifests tremendous future possibilities.

Cash receipts and Cash disbursement

The entrepreneur should determine the ___ that the enterprise is most likely to experience

Financial Institutions and other financiers

The financial statement must be synthesized in order to capture both the upside and downside prospects

Cost of goods sold

The finished goods when sold become the ___

Giving of cash

The first transaction

Entry

The left side of each container which is a use of funds

Liquidity Ratios

The matching enables the analyst to compute for ____

Personal Mission

The personal purpose of the entrepreneur for the sake of the customers being wooed

Return of Assets

The ratio of Net Profit after Taxes to Assets gives the ___

Return on Equity

The ratio of Net Profit after taxes to owners' equity yields

Return on Sales

The ratio of net profit after taxes to sales provides the ___

Pro forma balance sheet

The respective totals of assets and liabilities plus owners' equity will not be the same in the initial attempt to construct a

Exit

The right side of each container which is a source of funds

Sole Proprietorship

The simplest and easiest enterprise to organize. The owner or entrepreneur has sole control over the enterprise, thus, reaps all the profits and, also, all the losses. There is no distinction between the owner and the enterprise, meaning, the entrepreneur is personally answerable and obligated to fulfil all the terms and conditions of any business contract that he or she enters into.

Financial transaction

The sourcing and usage or application of funds

Debits

The technical term for recording on the left side

Credits

The technical term given by the accountant for right side exits

Sales

The top line of the income statement

Solvency Ratios

The total debt-to-equity and the long-term debt-to-equity ratio are called__ because they try to approximate the relative financial risk being taken by the enterprise

Operating Profit

The total is then subtracted from the gross profit forecasted in order to derive ____

Capital Structure of the Enterprise

The way the financial package is designed

Long term debts

These are PAYABLE AFTER ONE YEAR (Notes Payable)

Accrued Expenses

These are expenses incurred during the accounting period concerned but not yet paid during that period

Operating Expenses

These are expenses that are not directly related to manufacturing the product of the enterprise

Current Liabilities

These are financial obligations that MUST BE PAID WITHIN ONE YEAR

Activity ratios

These ratios allow the analyst to gauge the efficiency, effectiveness and economy levels of enterprise operations in financial terms

other assets

They are composed of ORGANIZATIONAl and PRE- OPERATING EXPENSES.

current assets

They are composed of cash, inventory, accounts receivables, and other ___ assets.

fixed assets

They are composed of property, plant, and equipment.

Period costs

They are the selling, general, and administrative expenses (SGA Expenses)

Investors

They should be given "fearless forecasts" on expected profits, dividends and market values.

Owner's equity

Third group of liabilities

Profitability Ratios

Third group of ratios

Depreciation Expenses

To determine this, the forecaster has to refer to the depreciation scheds calculated by the enterprise's accountants for each fixed asset

Partnership

Two or more persons binding themselves into a contract to contribute money, property, and expertise in a common venture with the intention of dividing the profits among themselves. Can own its own assets, can incur its own liabilities, and can sue and get sued. A minimum of two persons can constitute a partnership, but there is no limit to the number of persons in a partnership. The decision of one partner is binding to all the other partners

Other Asset

Usually intangible, such as organizational development expenses which are enterprise creation expenses

Finished goods inventory

When the goods are completed they become ___

Work in process inventory

When the raw materials are then processed in the factory

Operating flow

Which is the income statement

Cash

Will be used to pay for labor and supervisors, which again would be used inside the factory

Balance sheet forecast

Will reveal the loan status of the enterprise

75

__% will comprise the unpaid capital subscriptions of a stock corporation

Taxes

are computed following government rules and regulations

Account receivables

are normally collectible within the month or within a couple of months

Limited partnership

consists of partners who have limited liabilities while others in the partnership have unlimited liabilities. Binding contract Is needed in order to form a partnership and must be signed by all of the partners

Purpose of Stating the Mission Statement Clearly

for the INVESTORS who need to know what they are getting into; for the FINANCIERS evaluating the enterprise; for the GOVERNMENT FUNCTIONARIES who must regulate the activities of industries and businesses

Good name

identifies the company very well, and communicates what the company is all about and what its products are all about.

General partnership

is composed of partners who are liable individually and collectively to all those who have claims against them. Claimants can run after all the personal assets of all the partners.

Current liabilities

suppliers' credit and other short term credit

Important Information That a Business Plan Should Contain

the business itself, the organizers, the management and technical people, the financial structure, its market potential, its target market, its projected sales, expenses, and profits, its probable risks