entrepreneurship

The following tactics represent bootstrapping except

"floating" checks

A two year old asset has a depreciable life of 10 years. its initial purchase cost was $450,000 and its depreciated by 10 percent annually. what is the remaining depreciable value of the asset

$360,000

current debt represents amount borrowed from banks or other lending sources for___or less

12 months

As a general rule an entrepreneur should maintain a current ratio of _____ or have a good reason for not doing so.

2

An example of a current asset is

Accounts receivable

after their first day Ashley and Cameron's profits were $45, but their cash increased by only $30 because their___ also increased

Accounts receivable

As Krista explained to her daughters Ashley and Cameron, the report that provides a picture of the firms assets and its sources of financing at a point in time is the

Balance sheet

The equation, sales-expenses=profits would represent which financial statement

Cash flow

the___shows all cash receipts and payments involved in operating the business and managing its financial activities

Cash flow statement

which of the following is not used in determining a company's profitability on assets

Debt ratio

for Eric's book company, which item is not a cash flow

Depreciation on book binding equipment

Most firms of any size need fixed assets which include

Equipment

A business plan should specify that at least _____ of the firm's financing should come from equity, and the rest will come from debt.

Half

An example of a current asset is

Inventories

Working capital refers to current assets which include the following except

Notes receivable due within 24 hours

Earnings before taxes are computed by deducting the firms interest expense from its___income

Operating

The___shows the results of a firms operations over a period of time, usually one year

Operating

Interest expenses is deducted from the___to arrive at the company's profits before taxes

Operating profits

Most firms of any size need working capital which includes the following except

Owners equity

the amount of the business owners initial investment, owners' later investment in the business, and retained earning comprise

Owners equity capital

The major distinction between cash-basis and accrual-basis accounting is that the

Point of recognition of revenue and expenses is different

For the typical small firm the primary source of equity capital for financing growth is

Retained earnings

The cash flow statement measures cash flows on

a cash-basis

The life cycle of receivables begin with

a credit sale

an example of a fixed asset is

a delivery truck used by a grocer to deliver merchandise to customers

current assets include all of the following EXCEPT

accounts payable

The income statement reports financial information related to the following broad areas of business except

accumulated depreciation

which asset is not used to calculate net operating working capital

accurals

cumulative depreciation expense is shown on the

all of the above

The greater a firm's sales, the greater need for financing because of greater _____ requirements.

asset

The debt ratio is determined by dividing the firms total debt by the toal

assets

The results of forecasting asset requirements for a startup business will only be as good as its

assumptions

the overall approach to forecasting is straightforward-entrepreneur make____and, based on these____ determine financial requirements

assumptions

The most common way that entrepreneurs accomplish more with less is called

b

Cecilia Levine purchased badly needed equipment from a customer who deducted an amount from his invoices to cover the cost of the equipment. This strategy on the part of Levine illustrates a growth

bootstrapping

an account that is not part of the working capital cycle is

borrowed funds

which suggestion did Marc Lecin, CEO of the united companies, find the most useful in decreasing the company's accounts receivables

calling

which financial process is not part of managing working capital

capital budgeting

A simple listing of expected cash inflows and outflows provides the entrepreneur with an

cash budget

No single planning document is more important in the life of a company than the

cash budget

The cash conversion period is the time between

cash payment for inventory and collection of accounts receivable.

management of working capital focuses attention on

cash, accounts receivable, inventory and long-term investments

David Allen plans to invest $110,00 of his personal savings to provide the needed startup equity for D&R products inc. He will receive ___for his investment

common stock

After projecting sales the next step in forecasting a company's income is to project

cost of goods sold

Assets that are relatively liquid are classifies as

current assets

D&R Products forecast its cash requirements for year one at 4% of sales, resulting in a $10,000 cash need. The cash will be reflected in the balance sheet as _____.

current assets

if a firms current ratio improves from 1.5 to 2.0, what has likely happened?

current liabilities have decreased

The conventional measure of a firm's liquidity is the

current ratio

the number of days, on average, that a company is holding inventory is called

days in inventory

the value of depreciable asset

decreases over time

In order to derive a cash flow statement, starting with the income statement the owner must add back in

depreciation expenses

according to the text the first step in preparing cash budget is

determine the amount of cash collections

net cash flow and net profit are

different

In a 2009 survey Inc.com asked its readers "What is the hardest part of owning a business right now?" The leading problem cited was

difficulty in forecasting accurately

the first step in monitoring inventory is

discover how long items have been there

The "bottom line" of the income statement is affected by all of the following EXCEPT

dividends paid to owners

For every dollar of assets there must be a corresponding dollar of

financing

Other assets include

goodwill

D&R Products forecast that it will require $10,000 for equipment and $40,000 for a building. These items will be reflected in the balance sheet as _____.

gross fixed assets

if a firms current ration___ it liquidity___

increases, increases

One real danger in over-reliance on a cash budget is that it may lead to

inflexibility

For their opening day, Ashley and Cameron bought $40 of "premium pink lemonade mix" and paper cups which constituted their

inventories

Raw materials and products held by the firm for sale constitue

inventories

other assets would include all of the following except

inventories

A company's net income depends on all of the following except

inventory estimates

the third day in the working capital time line is

inventory is sold on credit

Working Capital Management

involves managing long-term assets and liabilities

Net cash flow

is the difference between cash inflows and outflows

fixed assets include

land

A firm should finance its growth in such a way as to maintain adequate

liquidity

most companies who involve the US postal service in collecting customer payments use a

lock box

when developing pro forma cash flow statements the following numbers must be scrutinized carefully

marketing activites

Operating expenses include

marketing-related expenses

Accounts receivable financing

means borrowing money against the firms accounts receivables

Winston wolfe believes it is important to produce a profit and loss statement every

month

which statement is true about firms with cash culture

need less working capital

the number resulting when taxes are subtracted from earnings is the ___income

net

Cash deposits during a month less checks written during the same period equal

net cash flow

a wholesale sun glass company should break down it annual cash budget into shorter time units because

of the seasonality of its sales

The liquidity of a firm is

often measured by a ratio of current assets to current liabilities

The cash flow statement reflects cash flow from

operating, investment, and financing activites

on the balance sheet, for every dollar of assets there must be a dollar of financing in the form of debt or

owners equity

an account that is not part of long-term cash flow is

payment of inventory

The assets-to-sales relationship tends to be relatively constant within an industry, allowing for a(n) _____ technique to be utilized in projecting asset requirements.

percentage-of-sales

Tres has receives a large contract and has taken a loan to buy inventory. considering the timing of the lone, Tres may be____ to complete the contract

pledging receivables

the second step in the working capital cycle process is to

sell the inventory for cash or debit

a business loan for 9 months would be best described as an

short-term note

which statement is true concerning the study on small firms management of accounts

small businesses were averaging $1,500 in overdue customer payments monthly

Accounts payable and accrued expenses rise as a firm's sales increase. This phenomenon is known as

spontaneous debt financing

the computation of cost of goods sold and operating expenses is based on all of the following except

the firms interest expense

Inventory is called an "evil" because it

ties up funds that are not actively productive.

the number of days, on average that a firm is extending credit to its customers is called

two of the above are correct

D&R Products forecast first year asset requirements of $143,000; therefore, the total debt requirement must be

unknown; not enough information

accounts receivable financing might include

using a bank, lender, or other financing company