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