GEB 4111 Exam 2 Study Guide

126. Fill in the blank: (1) delivery times that ___ and (2) demand that ____ your estimates are two things that make it difficult for a business owner to calculate the Optimum Stocking Level.

(1) vary (2) exceeds

178. What is the way to know how much you need to order so that you have an adequate supply of inventory on hand?

*A. Economic order quantity

167. Which of the following terms are accounting methods used for valuing capital assets?

*A. all are accounting methods used for valuing capital assets B. book value C. fair market value D. disposal value

Which of these is NOT an example of proper cash flow management?

A company decides to spend way more than usual on a large order of inventory because business will be slow up to the point when the bill is due.

Which statement about days receivable is incorrect?

A higher days receivable number is more desirable.

131. The following concerning the inputs into your business are true:

A. Your business objectives establish which raw materials are needed B. You must get informational feedback concerning your essential processes C. You should rely on your business objectives to determine how many people you hire D. None of the Above *E. All of the Above

79. According to the U. S. Dallas Federal Reserve Bank's definition of money, money has which of the following attributes?

A. is a medium of exchange C. provides a standard for measuring value D. is a store of value that can be saved for later purchase *B. all of the above

168. Which of the following terms are a type of feedback used in a control system?

A. reinforcing feedback *B. all are types of feedback used in a control system C. corrective feedback D. informational feedback

58. As an entrepreneur, the customer should pay_______ while the supplier is paid_______.

ASAP; as late as possible

To get the greatest benefit from outsourcing, you need to:

All: A. Know Yourself B. Keep strategy decision in-home C. Fully specify task that are to be outsourced D. Know with whom you are contracting

256. Active investors who understand the risks of private investment and they have the capacity to absorb a complete loss of their investment

Angel investors

Why is it important to understand the Receivables Turnover Ratio?

BOTH: B. The company could potentially not have to use external financing C. To determine the amount of time it takes a customer to pay

215. In the opening profile discussing Scott B. Walker, it described him trying multiple times to acquire 50% equity in Epic Aviation from which company?

BP

185. Method used to reduce the cost of perpetual inventory systems

Bar Coding

149. Which of the following involves trading goods and services without the use of money?

Barter

42. Which of the following is NOT a reason your bank balance and book balance would differ?

Because you bought extra inventory during a quarter

32.What is the formula for Ideal Inventory Calculation?

COGS/targeted inventory returns

127. Which of these is NOT and advantage of renting an asset.

Can be used as collateral to obtain borrowed funds

Which is not a benefit obtained by reviewing a monthly cash flow ledger for your business?

Can ignore areas where overspending occurred.

130. Land, buildings, and machinery are all examples of:

Capital assets

164. Assets that are expected to provide economic benefits for periods of time greater than one year are called?

Capital assets

Money that is immediately available to be spent.

Cash

EBITDA stands for earnings, before interest, taxes, depreciation amortization and is also known as the ____________.

Cash Flow Operations; CFO

154. Sensitivity Analysis is closely defined as

Changing estimates by either increasing or decreasing

245. SBIR is a grant program for which of the following:

Companies employing 500 people or less.

What are some common mistakes as to why entrepreneurs don't look at their cash flow prudently?

Company is in a fast-growth phase Sales growing quickly

225. Which is not one of the 5 C's of bank lending decisions?

Competition

129. Ric Cabot and his company Cabot Mills were wrestling with what business problem before his turnaround:

Competition from foreign suppliers had much lower costs than Cabot Mills.

67. Which of the following is not a way to improve account payable days?

Create larger interest penalty charges

134. This ratio measures the quality of a company's accounts receivable.

Days receivable

219. This ratio measures the quality of a company's accounts receivable.

Days receivable

196. What defines a short-term debt?

Debt that is due within 1 year

A business's cash flow is ________.

EBITDA

46. EBITDA stands for what?

Earnings Before Interest Taxes Depreciation and Amortization

236. Trade discounts are a set value based on net invoiced amounts provided to encourage payment

False

237. ProCore was one of the few companies that weren't hit hard by the 2008 recession.

False

241. Equity financing requires collateral.

False

T/F: All customers pay their net 30 before the 30th day.

False

T/F: If a company wants to reduce their need for working capital they should increase their cash gap.

False

T/F: Manufacturing companies typically expect payment in 45 days.

False

T/F: Rarely do states or cities in the United States have grant incentive programs for developing technology or technology companies.

False

T/F: Service-based firms can improve the amount, speed, or accuracy of work, or improve the supply chain

False

T/F: The first step in preparing a master budget is to prepare a balance sheet for each accounting period.

False

T/F: When first implementing a business it is crucial that you personally send out letters to enforce the payment of your receivables.

False

199. What is the second most common source of capital for a new venture after the entrepreneur's personal funds?

Friends and family

259. An R & D limited partnership generally progresses through three stages in which order according to the text?

Funding stage, development stage, exit stage

93. All of the following are cons regarding acquiring all funding at one time EXCEPT:

Hidden fees on surge of capital

242. Which of the following is not a cash flow financing loan?

Inventory loan

192. Which of the following is NOT true about joint ventures?

It is the most used method of reducing costs and risks of acquiring capital assets

Which of the following is a "pro" of Series of Funding?

It keeps the entrepreneur disciplined and minimizes wasting money. The entrepreneur is paying only for current expenses. The new series of capital comes in at a higher valuation, thereby allowing less equity to be surrendered.

55. What is the ideal cash gap?

It varies by industry

60. What company faced the failure of their business as a result of declining sales and inadequate cash flow?

J.W. Hulme, Inc. of Minnesota

191. What is the practice of purchasing and accepting delivery of inventory only after it has been sold to the final customer?

Just-in-time inventory

173. Which of the following is not a core business function?

Legal

35. Which of these is not a source of cash or cash inflow?

Loan Payments

141. Which of the following are NOT advantages of including employees in the management process?

Lower your payroll expenses

74. You should consider the following options if a potential customer does not have a credit history or has a bad one.

Obtain a 100% payment before work on the order can begin Require a 100% payment before or at the time of delivery (COD) Request a 33% payment at order receipt and 33% at the time of shipment, with the balance dye 30 days later *D. All the above

159. The two types of leases are

Operating and Capital

186. ______________ is focused on all of the activities of the business

Operation Management

166. The process of transforming materials, labor and energy into goods and services are called?

Operations

120. Which definition most accurately describes Best Practices?

Optimal ways to get things done in a particular industry, profession, or trade

112. Which of the following is not included in the dollars saved equation?

Outstanding Receivables

187. Hardware and software combinations that integrate inventory management directly into accounting software

POS System

175. The two most commonly used financial ratios for comparing investment alternatives are

Payback period and Return on Investment

45. Which of the following is not a way to improve your accounts payable days?

Plan cash payments all at the same time

119. All of these are examples of decisions that can be made for a business as a result of capital budgeting except

Rearranging the store layout

65. The ideal situation is to collect all your ________ quickly while paying your outstanding bills as late as possible without jeopardizing the service you get from your suppliers.

Receivables

88. _____ gives an individual a way to estimate the bank's available balance for the purpose of managing his/her cash flows.

Reconciliation

257. Guarantees loans made by both banks and other financial institutions

SBA

181. Unless you are selling a product that has very high unit costs, such as automobiles, tractors, or airplanes, the effect of having too little inventory is worse than the effect of having too much. For this reason, most businesses deliberately time the placement of orders to keep some extra amount of inventory on hand called _______________.

Safety stock

116. Which of the following can be considered a source of Internal Financing?

Sale of assets

43. What are the two factors that must be controlled with cash in flows to help conserve cash

The amount of cash being paid out and the timing

115. What is the future value of an item?

The amount that a specific amount of money will grow to be

132. Which is NOT an assumption of depreciation?

The asset is intangible

209. Which of the following is NOT considered a hidden cost of outside capital?

The availability of capital decreases the impulse to spend.

143. The optimum stocking level is the amount of inventory that results in the minimum cost based on all of the following except what?

The average amount of time it takes to ship your orders to customers

246. Which of the following is most important to make outside investors feel comfortable investing

The commitment level of all other monies available

123. The cost of processing an order, cost of keeping inventory, cost of lost sales, and the time it takes to receive inventory after it is ordered determines:

The right amount of inventory to keep on hand and the right amount of inventory to order at one time.

135. What is the main advantage of All Funding at one time?

There is no need to allocate resources to raising future funding

220. What is the main advantage of All Funding at one time?

There is no need to allocate resources to raising future funding

106. True or False. Providing noncash incentives for employees is a commonly used method for businesses to reduce their amount of cash outflows.

True

146. Small business or even large firms may partner together to minimize asset costs and maximize asset efficiency.

True

A good accounts receivable is proactive and allows the entrepreneur to do business with the customers who may not have a credit history as well as those with a bad credit history.

True

Key goal of cash flow management is to have enough cash on hand when you need it.

True

T/F: A good accounts receivable collection system is proactive.

True

T/F: Acquisition Cost is the total cost of acquiring an asset including such costs as purchase price, transportation installation, testing, and calibrating in order to ready it for its first productive use.

True

T/F: Companies that cannot achieve positive cash flow are essentially involuntary not-for-profit organizations that eventually become insolvent.

True

T/F: Entrepreneurs must know that projected cash flow determines the amount of capital a company need in the future

True

T/F: Even with ample money in accounts receivable, an inefficient accounts receivable system can cause major cash flow problems.

True

T/F: In 2005 the electronics payment industry was a hot area and the time was ripe for maximizing the value of an acquisition?

True

T/F: Inventory valuation begins with knowing how much of what you are holding.

True

T/F: Operations management can add value to the bottom line through efficiencies and revenue growth.

True

T/F: Productivity is equal to outputs divided by inputs.

True

169. The ____ is the difference between the original cost of an asset and the total amount of depreciation expense that has been recognized to date.

book value

The period between paying cash and receiving cash is called:

cash gap

255. Which is not one of the Five Cs of lending usually considered in bank lending decisions?

credit

258. Always take the maximum number of years allowable for

debt financing

101. EBITDA accounts for earnings before interest, taxes, , and .

depreciation and amortization

99. During the early stages of growth in their businesses, many entrepreneurs focus more on ____________ than they do on ______________.

generating sales, collecting receivables

81. A situation where a business's sales grow at an exponential rate but finds itself short of cash is known as ____ ____ .

growth trapping

165. The materials, labor and energy put into the production of a good or service is called?

inputs

52. Comprehensive budgets are often referred to as:

master budgets

71. Adding back depreciation and amortization explains why a company with __________ net earnings on its income statement can still have a ___________ cash flow.

negative; positive

31. How soon does an insurer pay a claim in credit insurance?

within 60 days of claim date

177. To perform a net present value analysis, must do all of the following EXCEPT:

*B. Multiply the net present value by the estimated time and the discount rate.

124. If you invest $50,000, which ROI would be most attractive?

0.718 (The Highest)

73. The Gartner Group is a high-tech consulting firm that generated _______ in revenues in 2012.

1.62 Billion

162. Where does Cash Flow rank in Business Owner Priorities according to the NFIB study?

13th

69. Where does Cash Flow rank in Business Owner Priorities according to the NFIB study?

13th

According to the National Federation of Independent Business, businesses consider cash flow where on their list of priorities?

13th

77. The most common payment terms amongst businesses is _______ .

2/10, net 30

238. Syntex Corporation raised __________ in an R&D limited partnership to develop 5 medical diagnostic products.

23.5 million

103. Suppose your goods are carried in inventory 30 days, you must pay your supplier in 45 days, and it takes 40 days to receive payment from your customers. What is the cash cap, or cash conversion cycle?

25 days

105. In November, Precious Puppies, Inc. made 10% sales in cash, and 90% on credit. The month following the sale, they collected 40% of sales made on credit. The second month following the sale, they collected 35% of sales made on credit. What is the remaining percentage to be collected for sales made on credit?

25%

40. When calculating the days outstanding how many months should you use for your average?

3

170. If a product originally sells for $10 and costs $2 to make and after a redesign can now be sold for $12 and costs $3 to make, what would the productivity ratio for the new version be?

4:1

44. On an average day how many businesses are behind on their bills?

5 Million

85. If a company which keeps its stock for on average of 20 days, which gets paid by its debtors on average within 30 days and which pays its creditors on average within 45 days has a cash-to-cash cycle of how many days?

5 days

54. Good customers typically expect to pay their bills how long after the due date?

5-10 days

254. USA Bank loans Expert Resources Company $1,000,000 through the SBA 7(a) loan program. This means that the SBA can guarantee % of the loan.

75

223. For real estate loans what percent of the assets value can one typically loan up too?

75%

136. One way to quickly get your hands on cash is factoring, or the act of selling your receivables to a finance company. When factoring, what percentage of the total amount to be collected will a factoring company typically allow you?

75-80%

221. For creditworthy customers, banks may finance up to ____ percent of the value of their accounts receivable in an accounts receivable loan.

80%

41. When Chuck & Jennifer took over J.W. Hulme, where did they get the funds needed to revive the company?

A mixture of an additional home mortgage and additional business loan

142. What are the decision rules to follow when reviewing IRR?

A. Accept only those alternatives for which the internal rate of return is equal to or greater than the business's weighted cost of capital B. Accept the alternative with the greatest IRR among those that meet the first criteria *D. Answers A and B

198. Which of the following is a type of money that can be immediately used to make payments?

A. Currency B. Demand deposits C. Travelers Checks *D. All of the above

217. What is a type of financing?

A. Debt Financing C. Equity Financing *D. Both A & C

152. Which of the following are disadvantages of payback period analysis?

A. Disregards the time value of money B. Ignores all cash flows that occur after payback period *C. A and B

231. What constitutes an "accredited investor"?

A. Institutional investors B. Investors who purchase over $150,000 of issuer's securities C. Investors whose net worth is $1 million or more at the time of same D. Directors, executive officers, and general partners of the issuing company *E. All of the above

224. Which of the follow are considered an accredited investor?

A. Institutional investors, such as banks, insurance companies, investment companies B. Investors who purchase over $150,00 of issuer's securities C. Investors with a net worth of over 1 million dollars at the time of sale *D. All of the above

210. SBA loans can be used for all of these purposes, EXCEPT for:

A. Land B. Machinery C. Debt Financing D. Furniture *E. SBA loans can be used for all of these

230. Which of the following is NOT a type of conventional bank loan?

A. Lines of credit B. Installment loans C. Straight commercial loans D. Long-term loans *E. All are types of conventional bank loans

84. To improve the accounts payable days, the entrepreneur can take the following actions recommended by several professionals:

A. Negotiate better payment terms such as net 45 or net 60 B. Time payments according to their due dates C. Plan cash flow realities D. Communicate with your suppliers *E. All of the above

100. Which of the following is NOT a way to improve the accounts payable days for a business?

A. Negotiate better payment terms, such as net 45 or net 60, instead of net 30 B. Communicate with your suppliers C. Avoiding interest penalty charges *D. All of the following are ways to improve the accounts payable days for a business.

109. Major components of a good accounts receivable collection system that is proactive include the following options:

A. Obtain a 100% payment before work on the order can begin B. Require a 100% payment before or at the time of delivery (COD). C. Request a 33% payment at order receipt and 33% at the time of shipment, with the balance due 30 days later. *D. All of the above make for a proactive accounts receivable collection system

122. What are proven techniques to increase cash inflows?

A. Offering discounts for prompt payments B. Factoring receivables C. Accepting deposits and progress payments *D. All of the above

158. What is it called for the amount of inventory that results in the minimum costs?

A. Optimum stocking level B. Reorder point *C. Both A and B

113. The value that you assign to your inventory that you have sold and that you have on hand affects which of the following?

A. The amount of profit that you recognize B. The value of your business *E. Both A and B

139. All of the following are factors in determining the right amount of inventory to keep on hand except.

A. The cost of processing an order B. The cost of keeping merchandise in inventory C. The cost of lost sales if you run out D. The time it takes to recover inventory if you run out *E. All of the following are important factors to consider

155. The right amount of inventory to keep on hand and the right amount of inventory to order at one time is determined by:

A. The cost of processing the order B. The cost of keeping merchandise in inventory C. The cost of lost sales if you run out D. The time it takes to receive inventory after it's ordered *E. All of the above

53. Which of the following are some of the reasons why a business would raise outside capital?

A. To meet season demand such as holidays B. Needed to finance long term sales growth C. May be required to purchase extensive capital equipment *D. All of the above

137. When considering among alternative investment possibilities, the payback period measure functions on two major rules. Which of these choices are one of those rules?

Accept the alternative with the shortest payback period among those that meet the first criterion.

111. Which of the following is not a source of cash or cash inflow?

Accounts Payable

66. One major area that most businesses are vulnerable to are:

Accounts receivable

227. Which of the following does not belong to the R&D limited partnership stages?

Acting stage

247. Another term for private investor is

Angel

202. Which of these statements regarding angel investments is NOT true?

Angel investors have a strong preference of funding product-based businesses over service-based businesses

195. How often should a cash gap industry comparison be made?

Annually

174. A series of equal payments made regularly over a set period of time is called _____?

Annuity

82. What is not a part of EBITDA?

Assets

188. What are capital assets?

Assets that are expected to provide economic benefits for periods of time greater than one year.

57. Which of the following is a type of "float", or delay in movement of money among depositors and banks.

Availability Float Processing Float *D. A and C

121. What is the difference between Availability and Processing float?

Availability is between banks, and Processing is between the check writer and the bank

140. Which of the following are advantages of determining ROI?

B. It is easy to calculate C. It relies on accounting information business owners, lenders, and investors are comfortable using *D. B and C are correct

239. The general types of financing for a new venture are:

B. debt financing *C. both B and C D. equity financing

176. Activities identified by authoritative bodies as examples of optimal ways to get things done are defined as:

Best Practice

233. What type of financing is usually performed to conserve cash?

Boot-strapping financing and Consignment financing

253. _____________________ and ______________________ are two methods used in financing to help conserve cash.

Bootstrap financing and consignment financing

36. Faster collections of accounts receivable means:

Both A and B You will not have to use external financing for current payables Money can be reinvested and generate returns

226. Which is not a method of conserving cash under bootstrap financing?

Buying the lowest quality option available

204. Installment Loans, Straight Commercial Loans, Long-Term Loans, and Character Loans fall under which type of debt financing frequently provided by commercial banks and other financial institutions?

Cash flow financing

208. In the five Cs of lending, which two are the most difficult to assess and are referred to as the "gut feeling" part of the loan decision?

Character & Capacity

205. Which type of loan is difficult to obtain without a third party co-signer?

Character loan

232. What type of loan is required when the business does not have enough assets to support it?

Character loan

211. The most common short-term external financing comes from:

Commercial Bank Loans

248. What is the most frequently used source of short term funds?

Commercial Banks

201. Which group of capital sources best resembles debt financing options?

Commercial banks, SBA insured loans, leasing companies

157. Which of the following is NOT a short-term asset that is critical to the success of a small business?

Credit

Paper-Rich, Cash-Poor situations can arise from:

Customers paying invoice past due date

218. Which of these below is NOT an agency that contributes to the Small Business Innovation Research (SBIR) program?

Department of Homeland Security

64. You should do which of the following to prepare forecasts for the weekly cash flows for a month at a time?

Determine the cash flows for each month Determine cash outflows Compare inflows and outflows to determine the net cash position *D. All of the above

216. The three stages an R&D limited partnership progress through are: funding, development, and exit stages. Which of these three stages includes the actual research?

Development

197. Which format is required by GAAP when preparing a statement of cash flows?

Direct method

190. What does EOQ stand for? (According to the text)

Economic order quantity

212. In 2005 what industry was a hot area with a time ripe for maximizing the value of acquisition?

Electronic Payments

207. All of the following would be considered an "accredited investor" EXEPT:

Employees

102. True or False. The National Federation of Independent Business conducts a survey every 5 or 6 years to establish the priorities of small businesses. Cash flow was considered a top 10 concern by business owners.

False

114. Outsourcing is a tactic that only large firms can use

False

118. A lock box is a locked receptacle for money, the keys to which are readily available to those who physically handle the receptacle.

False

128. Private bar codes consisting of any number of digits can be created for personal use and must be registered with GS1 US.

False

182. Capital leases are similar to renting, and operating leases are essentially the same as buying the asset.

False

95. The ideal level of accounts receivable is average daily sales multiplied by annual receivables.

False

189. The overriding goal of operations management is to be constantly...

Improving the organization, through a more efficient use of resources and through improved or expanded service to customers.

There are three ways a company can reduce its cash gap, those include:

Increase the numbers of days it takes to pay for inventory Decrease the number of days it takes to collect receivables. Increase the inventory turns

83. According to Dun & Bradsteet's Small Business Survey, what was the top priority?

Increasing Sales

138. Which are the three prominent characteristics of services that often impact operation choices and decision making?

Intangibility, Inseparability, Perishability

151. What is the largest current asset for most manufacturers, wholesalers, and retailers?

Inventory

48. The formula for Cash Gap Calculation is:

Inventory days + days receivable - days payable

The Cash Gap is calculated as:

Inventory days + days receivable - days payable = Cash Gap

51. What is the formula for calculating cash gap?

Inventory days + days receivable - days payable= Cash gap

92. Entrepreneurs may be able to find cash in which of the following internal locations:

Inventory. Accounts Receivables. *C. Both A and B.

What are some important key steps in effective management of account receivable?

Mail invoices on the same day the product is shipped or services rendered Know and become acquainted with the accounts payable clerk for each account

The procurement, _____ and management of working capital seem to be some of the most common and challenging task facing entrepreneurs.

Maintenance

171. Account Receivables are ___ that is owed to your business by your customers.

Money

39. For entrepreneurs in the beginning of their venture how often should they review their cash flow ledger?

Monthly

193. Which of the following is a reason why a business would need to raise outside capital?

More capital may be needed to finance long-term sales growth

33. Some banks will allow established customers to _______ their accounts by paying a check when the available balance is not sufficient to cover the check amount, but the ledger balance is.

Overdraft

Which is not a way to improve accounts payable days?

Pay all your bills at once to have a big cash outflow

145. There are 3 approaches to maintain records of inventory which are very common in small businesses. What are they?

Periodic Inventory, Perpetual Inventory, and Point-of-sale systems

108. Paper-rich, cash-poor situation is related to...

Poor cash flow management

222. Regulation D helps govern what sorts of deals?

Private Offerings

249. A formalized method for obtaining funds from private investors is:

Private Offerings

87. Delays in delivering checks from the writer of the check to the recipient's bank is called ______.

Processing Float

156. Which of the following are disadvantages to ROI?

Profits are not the same as cash B. The method ignores the value of money *C. Both A and B

117. What is moonlighting?

Pursuing an entrepreneurial venture while also keeping your day job

229. Underneath which law may you discover the answers to material information regarding a company and the number of sophisticated investors required for a private offering?

Regulation D

144. What is not an advantage of renting assets?

Renting usually costs less than purchasing

89. According to the U.S. Chamber of Commerce, the most common means by which employees steal cash from their employers is through ___.

Skimming

38. We discussed 3 categories of theft, including; skimming, phony disbursements, and larceny and embezzlement. The most common kind of theft is _____ and the biggest $ loss occurs from _____.

Skimming, Embezzlement

214. What are the three components of any R&D limited partnership?

The contract, sponsoring company & limited partnership.

147. Compared to expenses, cash comes into the business in a more dependable pattern.

True

150. The goal of operations management is to be constantly improving the organization, through a more efficient use of resources and through improved or expanded service of customers. True or false.

True

179. True or false: It is better to invest in a business with a higher ROI.

True

180. True or false: Inventory management is critical because for many small businesses inventory is the single greatest asset.

True

203. Most small business owners are risk averse.

True

206. The SEC can take administrative, civil, or criminal action without any individual lawsuit involved?

True

234. Cash-to-cash cycle is the time required for a business to acquire resources, convert them into product, sell the product, & receive cash from the sale.

True

235. Cash receipts budget is a schedule of the amounts and timings of the receipt of cash into a business

True

244. Many entrepreneurs use personal funds in their venture.

True

250. True or false: Real estate is also frequently used in asset-based financing.

True

251. True or false: One alternative to acquiring outside capital that should be considered is bootstrap financing.

True

252. Bank lending decisions are made according to the five Cs of lending: character, capacity, capital, collateral, and conditions.

True

63. The Bull Tuff Stock Trailers, Inc. company is 'possibly' experiencing loss based on employee theft.

True

68. Companies that cannot achieve positive cash flow are essentially involuntary not-for-profit organizations that eventually become insolvent.

True

70. The period between the payment of cash and the receipt of cash is called the cash gap or cash conversion cycle.

True

72. The longer the time, the more interest interest a company must pay on capital borrowed from a lender, thereby using working capital.

True

75. There are only three ways in which a company can reduce its cash gap.

True

78. The faster a company can convert its inventory to cash, the less cash it needs because it can reduce its days of inventory carried and decrease its inventory carrying cost.

True

86. A cash disbursements budget is a schedule of the timings and amounts of cash payments out of a business

True

91. An experienced entrepreneur doesn't fight to keep a customer who refuses to pay their bills until they are forced.

True

97. True of False: To prepare cash flow forecasts, the entrepreneur should first look at historical cash flow, if this information is available.

True

98. True or false: If you have cash on hand or can barrow at low rates, you should take a discount.

True

T/F: The Ideal Level of Accounts Receivable can be calculated by multiplying average daily sales and targeted days receivable

True

T/F: The period between the payment of cash and the receipt of cash is called the cash gap or cash conversion cycle.

True

T/F: There are only three ways in which a company can reduce its cash gab and these are increasing the number of days it takes to pay for inventory, decreasing the number of days it takes to collect receivables, and lastly increasing the inventory turns.

True

34. Which of the following is not the most common means by employees steal cash from their employers according to the U.S. Chamber of Commerce:

Understating cash on income statement

90. Series Funding means which of the following?

You should get only what you need year to year

240. The federal Small Business Innovation Development Act requires:

all federal agencies with R & D budgets in excess of $100 million award a portion of R & D funds to small businesses

228. Another name for collateral such as accounts receivable, real estate, inventory or equipment is________.

asset base for loans

184. JFM construction has leased equipment from another business. Specified in the lease is the existence of provisions for title of the asset to pass to the lessee at a price less than the asset's fair market value. What type of lease is this?

capital lease

62. Dividing financial duties between two or more people and counseling are preventative measures for______?

embezzlement

76. Cash Flow Forecast allows and entrepreneur to determine a company's _________ needs.

financial

104. In a recent poll conducted by the National Federation of Independent Business, which of these was not reported as one of the 3 primary causes of cash flow problems by small business owners?

lack of profitability

183. Typically used by internet firms, the system for the purchase of inventory after a sale is made is.

micro inventory

243. Private offerings:

must comply with Regulation D.

148. On average, how far in advance are deposits received?

one month

153. Intangibility, Inseparability, and Perishability are three characteristics of ________ that impact operations choices and decision-making, ultimately creating ________ for managers.

services; challenges

When contacting references to acquire about prospective customer's credit you should include all of these questions:

A. How many years they have had this customer B. What are their invoice terms C. Does the customer pay within the allotted invoice time D. Have they had any problems doing business

49. Which of the following is not included in EBITDA?

A. Interest B. Taxes C. Depreciation D. Amortization *E. All are included in EBITDA

XYZ Company wants to know what their Days Sales Outstanding and they already have the average accounts receivable balance over the past 3 months in which they will multiply by 90 days, but what will they need to do next?

Divide by total sales over past 3 months.

Obtaining funds for the company in exchange for ownership.

Equity financing

59. Faster collection of receivables indicates a company's need to utilize internal financing for current payables.

False

80. Pro forma financial statements cannot be used for raising money, evaluating operations, and for managing the business.

False

Jane is a new entrepreneur who wants to avoid having trouble paying her bills. What will help Jane be proactive with regard to the money owed to suppliers and will enable her to let specific vendors know in advance if a payment will be late?

Preparing a weekly cash flows summary every month.

37. There are two kinds of Float, these types are called.

Processing Float and Availability Float

61. "Placing a check in the mail" is equivalent to which of the following terms?

Processing float

94. Days receivable is a ratio measuring the average number of days it takes to collect accounts receivable.

True

96. Baby Einstein experienced substantial growth in their company because they adhered to conservative revenue projections and monitored their cash intake and outtake.

True