CE225 WK 4 Financial Analysis
Entrepreneurs who claim their estimates are "conservative" are usually overly optimistic about their ventures' future.
True
Financial analysis is simply the mathematical expression of an overall business strategy.
True
It is critical to show the first two years of pro-forma projections on a monthly basis because this is when a company is most vulnerable to failure.
True
It is possible to have positive earnings on the income statement and a negative statement of cash flows.
True
Most pro-forma projections for new companies show monthly income figures for the first two years.
True
Pro-forma financials often project sales occurring 5 years in the future.
True
Revenue projections help you to understand the company's revenue drivers.
True
Seldom are revenues in retail spread evenly across the calendar year.
True
You should attempt to calculate your operating costs before you start a business.
True
Which of the following equations is true about the Balance Sheet under GAAP? Select one: a. Assets = Liabilities + Shareholder Equity b. Liabilities + Assets = Shareholder Equity c. Shareholder Equity + Assets = Liabilities
a. Assets = Liabilities + Shareholder Equity
The following are examples of operating expenses, except: Select one: a. Property purchases b. Rent expenses c. Salaries
a. Property purchases
The build-up method drills down revenue projections to a typical ______. Select one: a. day b. month c. year
a. day
Under the Build-Up Method, you should start with the: Select one: a. Industry averages b. Income statement c. Balance Sheet
b. Income statement
Gross margin is calculated with the formula: Select one: a. Revenue plus COGS b. Revenue minus COGS c. Revenue times profit
b. Revenue minus COGS
The bottom line of the income statement states the company's _______. Select one: a. net assets value b. net income c. net size
b. net income
The bottom line of the income statement states the company's _______. Select one: a. net size b. net income c. net assets value
b. net income
The following are examples of operating expenses, except: Select one: a. Rent expenses b. Salaries c. Property purchases
c. Property purchases
An entrepreneur must be able to ___________, if his income statement does not match the industry average? Select one: a. rewrite your projections from scratch b. remove any information that deviates from the average c. understand and explain the differences
c. understand and explain the differences
An optimistic attitude about your business's future helps achieve positive cash flow sooner.
False
For an asset to appear on the balance sheet it must generate revenue.
False
It is better to let your accountant articulate the numbers of your business idea to potential investors.
False
Typically, a business begins to generate revenue within the first two months after it launches.
False
When we graph costs over time, we see them decreasing exponentially.
False
