Quiz 4
Venture capitalists are experienced professionals who provide a full range of service including:
Management consulting
When going public (public offering of a stock) an advantage might be:
Size of the company's capital amount
Factoring is
the sale of accounts receivable at discounted values
Acme Company sells windshield wiper blades and has fixed costs of $5,000. The price of each wiper blade is $10 and the cost to produce is 5$ per wiper blade. What is the contribution for Acme Company
$5
Vegan steaks had the best year ever, with sales of $4,500,000 and operating profit of $950,000. The previous year's operating profit was $900,000. They contributed their success to the purchase of a new machine. That machine was purchased for $20,000 the year before and cost Vegan Steaks $5,000 to operate. The balance sheet at the end of the showed accumulated depreciation of $4,000. Calculate the ROI for the year.
170%
Arrowhead Inc. sells hatchets and has fixed costs of $12000. The price of each hatchet is $13 and the cost to produce is $7 per hatchet. What is the break-Even Quantity for arrowhead Inc.?
2000
Abby runs a coffee shop and needs a new all in one drink machine to replace her aging equipment. She calculates that she will be able to offer more types of drinks with the new machine, increasing her sales, and can eliminate the repair costs she currently has with her old equipment. The cost of the new machine is $10,000 and she determines that her benefits in the first year will be $15,000 between increased sales and decreased repair costs. What is the return on investment in the first year?
50%
which of the following is not a myth about venture capitalists
a good management team is more important than a good idea to a venture capitalist
which of the following would be commonly used for medium term financing
finance companies
cash flow measures what activity in a business
income and expenses
the use of debt to finance a new venture involves a payback of the funds plus ___________?
interest
If the return on Investment (ROI) ratio is negative, the cost of the investment,
is greater than the gains
Which is an important question for the entrepreneur to ask when evaluating the venture capitalist?
is the person someone with whom the entrepreneur can work?
using a leverage break-even strategy, higher debt means that
it will take longer to break even
one of the advantages of public offerings is
liquidity
Which of the following is not a disadvantage of debt financing?
low interest rates reduce the opportunity cost of borrowing
many new ventures find that debt financing is
necessary
which of the following is an advantage of debt financing
no relinquishment of ownership is required
any time one has money, there is a cost that corresponds with the decision of how to spend the money. This cost is called
opportunity cost
short term debt is
paid back on 1 year or less
Equity Capital is often raised through:
public stock offerings
a disadvantage of debt financing is
regular interest payments
one of the disadvantages of equity financing is
requires sharing the ownership and profits with the funding source
___________ is one of the disadvantages of going public
shareholder pressure
under a conservative break even strategy
the company uses its equity to help pay for regular operating expenses.
opportunity cost is
the highest value surrendered when a decision to invest is made.
which of the following statements is not true of venture capitalists
they are interested in taking over the firm and managing it
which of the following is not a characteristic of an angel investor
they invest only in high tech industries
Which of the following is not a characteristic of a venture capitalist
they only invest in business in their local geographical area
breakeven is defined as the point where
total costs are paid by the income from the sales
Contribution margin is
what is left of the price to pay for fixed costs after paying variable costs
the most common source of debt financing is
commercial banks
which of the following terms is not synonymous with social lending
commercial lending
Which of the following is not a question commonly asked by banks of entrepreneurs?
do you plan to leave the country soon?
An informal risk capitalist is referred to as
Angel Investor
which of the following is not a danger of social lending?
Cost and complexity of setting up the solicitation site
when accounts receivable are bought from a company for capital funding it is called:
Factoring
Which of the following is not a type of debt financing
Private Placement
finance companies are asset based lenders who lend money against all of the following assets except:
Real Estate
of the following, which is more likely that the others to be deemed a potential danger of social lending?
business plan disclosure
