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
