ETR401 chap 15

C

"Profits are secondary to cash flow" is a financial management need in which phase of business? A. Financing for growth B. Financing for exit C. Financing for start-up D. Financing for operations

A

An organization that supports start-up technology businesses by providing inexpensive office space, a variety of support services and resources is called as a(n) A. accelerator. B. community development organization. C. small business investment company. D. credit reporting agency.

D

As Joyride Graphics moves into the growth phase, which of these would more likely become its dominant financial management need? A. Cash flow "smoothing" B. Investing to build equity and firm value C. Productivity D. Cash for marketing

D

Cash flow "smoothing" is a financial management need in which phase of business? A. Financing for growth B. Financing for exit C. Financing for start-up D. Financing for operations

B

It is required that every U.S. agency that makes research grants provide a minimum of _____ percent of its grant budget to small businesses, as defined by the SBA. A. 10 B. 2 C. 18 D. 25

C

Komter and Vollebergh showed that gifts given to extended kin are usually made because of A. feelings of affection. B. tax avoidance. C. feelings of obligation. D. hidden agenda.

D

LLCs have a choice, under federal tax law, of being taxed as either a corporation or as a A. sole proprietorship. B. limited liability company. C. independent, single person business. D. partnership.

C

Ownership of corporations is established by _____ while ownership of limited liability companies is shown by _____. A. stock certificates; LLC agreements B. share agreements; stock certificates C. stock certificates; member share certificates D. member share certificates; share agreements

A

People who buy ownership rights in your business are considered A. outside equity investors. B. family. C. debt holders. D. creditors.

B

Personal credit cards provide _____ financing in the _____ phase of business. A. equity; financing for start-up B. debt; financing for growth C. gift; financing for exit D. equity; financing for operations

C

Restrictions imposed by loan contracts on the operations of a business, such as requiring that a specific minimum net worth be maintained, a specific debt-to-equity ratio not be exceeded, no dividends be paid to stockholders and so on, are known as A. financial contracts. B. legal bonds. C. loan covenants. D. credit assurance.

B

The _____ of the business is the most important single factor for being able to borrow significant amounts of money. A. character B. capacity C. condition D. collateral

A

The amount that revenues exceed expenses is known as A. profit. B. cash flow. C. operating margin. D. goodwill.

A

The information collected and reported by the CRA does NOT include which of these areas? A. Personal health history information B. Identifying information C. Credit information D. Public record information

C

The level of probability that an investment will not produce expected gain is called A. interest. B. dividend. C. risk. D. diversification.

B

The most common form of institutional gift financing is in the form of A. incubators. B. reduced taxes. C. state grants. D. donated capital.

B

The percentage amount that the payout of an investment differs from original cost is called as A. dividend. B. gain on investment. C. risk. D. interest.

A

The primary concern for equity investors is A. growth potential. B. protecting the principal. C. interest. D. repayment.

C

The ratio of debt to equity that provides the maximum level of profits is called the A. cost of capital. B. declining financial leverage position. C. optimum capital structure. D. WAC.

A

The ratio of profits to owner investment in a business is called A. return on equity. B. return on assets. C. return on sales. D. return on inventory.

A

The two largest governmental grant programs that are specifically intended for small business are A. SBIR and STTR. B. SBA and SBDC. C. EDA and DBED. D. tax credits and tax abatement.

A

There are two general sources of gift financing A. institutional and personal. B. debt and equity. C. consumer and commercial banks. D. angel and venture capital.

B

This is a set of theories and techniques used to optimize the receipt and use of capital assets. A. Wealth management B. Financial management C. Risk management D. Quality management

B

This is the measure of the amount of debt relative to total investment. A. Cost of capital B. Financial leverage C. Optimum capital structure D. Financial risk

B

This ratio is the measure of how much money can be made available very quickly to pay obligations within the fiscal year. A. Current ratios B. Acid test ratios C. Activity ratios D. Leverage ratios

B

This ratio measures the percentage of sales revenue available to pay operating costs and to provide profits after paying for inventory. A. Profitability ratios B. Gross margin ratios C. Activity ratios D. Quick ratios

B

When you sell part of your business, the money you receive is A. debt. B. equity capital. C. gift. D. tax credit.

D

Which of these refers to something of value given or pledged as security for payment of a loan? A. Character B. Capacity C. Condition D. Collateral

C

_____ is provided by state and local governments, primarily to encourage specific activities that are expected to improve the blighted areas or provide additional employment. A. Debt capital B. Venture investment C. Tax abatement D. Equity capital

A

_____ is the value of a business that exceeds the sum of the value of all individual assets but that cannot be sold separately from the business. A. Goodwill B. Collateral C. Inventory D. Debt

C

A legal "artificial" entity that is formed by filing specific documents with a state government is called a A. sole proprietorship. B. partnership. C. corporation. D. general partnership.

D

Accelerators are also called as A. LLCs. B. corporations. C. partnerships. D. incubators.

C

Borrowing increases potential profits by A. increasing the weighted average cost of capital. B. minimizing capital funds. C. lowering the weighted average cost of capital. D. enhancing the equity position in the business.

C

Direct reductions in the amount of taxes that must be paid, dependent upon meeting some legal criteria are called as A. tax abatements. B. grants. C. tax credits. D. debts.

D

Gifts of money made to a business for a specific purpose are called A. equities. B. debts. C. tax credits. D. grants.

B

Given that the Joyride Graphics is in a start-up phase, which of these would represent its financial management need? A. Building owner's wealth B. Profits being secondary to cash flow C. Investing to build equity and firm value D. Cash for building inventory levels

A

Identify the organization authorized by the SBA to make insured loans to small businesses that are expected to increase economic activity within a specific geographic area. A. Community development organization B. Accelerator C. Small business investment companies D. Limited partnerships

C

Identify the type of ratio that measures how productive a particular asset is in producing sales activity. A. Current ratios B. Profitability ratios C. Activity ratios D. Leverage ratios

C

Identify the type of ratio that measures the relative risk that a business setback could cause bankruptcy. A. Liquidity ratios B. Gross margin ratios C. Leverage ratios D. Profitability ratios

C

If Johnny wants limited liability with Joyride Graphics, he can consider any of these legal forms EXCEPT A. a corporation. B. a limited partnership. C. a sole proprietorship. D. an LLC.

B

If you plan to _____your business, you should be removing all surplus cash, and tightening the cash-to-cash cycle to the shortest time possible. A. transfer B. sell C. terminate D. close

B

In business and in law, responsibility is called A. assets. B. liability. C. equity. D. value system.

A

In general, all the forms of business organizations can be categorized along two dimensions: (1) how much responsibility owners have for the organization's liabilities, and (2) A. how the business is taxed. B. how the business is financed. C. who the target market is. D. whether it is a manufacturing or service organization.

B

In the Small Business Administration guaranteed loan payment programs, you must be _____ before you qualify. A. approved by a bank B. turned down by a bank C. partner with a bank as a co-signer D. a successful business

A

In which phase of the business should Johnny be able to apply and obtain institutional gift financing? A. Growth B. Merge C. Start-up D. Develop

D

To invest in multiple investments of differing risk profiles for the purpose of reducing overall investment risk is called A. growth potential. B. dividend. C. specialization. D. diversification.

B

Using outside equity in your business A. will increase your own exposure to financial loss. B. will protect it from increased costs in the form of interest. C. is inexpensive. D. solves problems of control and decision-making.

C

Which of these sources of equity financing is available during all four phases of business? A. Angel investors B. Friends and family C. Venture capital D. Self generated funds

D

Which type of ratio measures management effectiveness in creating wealth from sales and from invested funds? A. Liquidity ratios B. Activity ratios C. Asset turnover ratios D. Profitability ratios

A

Which of these is NOT a form of a personal gift? A. Tax credits B. Free use C. Forgiveness D. Piggybacking

C

Which of these is a government organization that works to increase economic activity in the form of job opportunities within a specific geographic area? A. Small Business Administration B. Center for regional progress C. Economic development agency D. Rural economic enterprise agency

C

Any valuable asset that is donated to your business without any obligation to repay or to give any ownership interest is called A. debt. B. equity capital. C. a gift. D. a tax credit.

A

A legal obligation to pay money in the future is called A. debt. B. equity capital. C. gift. D. tax credit.

D

A business formed by a single individual who is responsible for all debts and claims against the business is called a A. limited liability company. B. corporation. C. partnership. D. sole proprietorship.

D

During the start-up phase of a small business the "3-F investors" are all of these EXCEPT A. friends. B. family. C. fools. D. foundations.

C

Private businesses that are authorized to make SBA insured loans to start-ups and small businesses are called as A. community development organizations. B. accelerators. C. small business investment companies. D. limited partnerships.

B

What do you call a business that collects, collates and reports information concerning an entity's use of debt? A. Community development organization B. Credit reporting agency C. Accelerator D. Small business investment companies

A

When debt increases as a percentage of total investment, the value of the firm A. increases at a decreasing rate. B. decreases significantly. C. increases at an accelerated rate. D. enhances equity position.

B

When you are given the funds for your business from an account your family set up for your future education or first home, then it is called as A. piggybacking. B. accelerated cash-outs. C. free use. D. overpayment.

A

Where family or friends let you add your purchases with theirs in order to get lower prices it is called as A. piggybacking. B. accelerated cash-outs. C. free use. D. overpayment.

C

Which of the following is the term used for the expected average future cost of funds? A. Optimum capital structure B. Financial leverage C. WAC D. Financial risk

B

Which of the following statements is true regarding business angels? A. Individual angels are publicly known and hence easy to find. B. Individual angels typically invest between $50,000 to $100,000. C. Individual angels may invest remotely via syndicate. D. The reporting requirements of individual angels are usually formal and are set by an angel fund.

D

Which of the following statements is true regarding the Fair Credit Reporting Act? A. It requires that consumers investigate and report any inaccuracies to all nationwide CRAs. B. It provides CRAs with 60 days to investigate cases of inaccurate information. C. It requires that CRAs independently confirm information. D. It requires that all information reported by CRAs be accurate.

B

Which of these financing sources is very rarely used by small businesses? A. Family and friends B. Angel investors C. Credit cards D. Banks

C

Which of these is the least available funding source for new firms? A. Loans from family and friends B. Owner capital C. External loans from commercial-rate lenders D. External loans from motivated lenders

D

Which of these provide debt financing during the start-up phase of business? A. Angel investors B. Factor receivables C. Public stock offerings D. Incubators

D

Which of these refers to an institution to which private wealth is contributed and from which private wealth is distributed for public purposes? A. SBA B. Limited Liability Company C. EDA D. Foundation

A

Which of these represent the number one source for small business financing? A. Owners B. Angel investors C. Government programs D. Banks

C

_____ is judged largely by the owner's personal credit rating and by that of the business. A. Capacity B. Collateral C. Character D. Condition

B

_____ is money from selling part of your business to people who are not and will not be involved in the management of the business. A. Debt B. Outside equity C. Gift D. Tax abatement

A

_____ measure the business's ability to pay debts and expenses that are due in the current accounting period. A. Liquidity ratios B. Profitability ratios C. Activity ratios D. Leverage ratios

B

_____ refers to the percentage cost of obtaining future funds. A. Risk B. Cost of capital C. Financial leverage D. Optimum capital structure

A

A charge for the use of money, usually figured as a percentage of the principal is called A. interest. B. dividend. C. tax. D. risk.

A

Angel investors provide _____ financing in the _____ phase of business. A. equity; financing for start-up B. debt; financing for growth C. gift; financing for exit D. equity; financing for operations