Management 350 Chapter 6
____________ is using low-cost or free techniques to minimize the cost of doing business.
bootstrapping
A _________ is the purchase of substantially less than 100% if a business.
buy-in
A ___________ is the purchase of substantially all of an existing business.
buyout
________ is the process of investigating a business to determine its value.
due diligence
The _________ is the ratio of the value of a firm to its annual revenues.
earnings multiple
_________ refers to the process of analyzing the resources available and creating a product or service from them.
bricolage
A _______________ is the value of the business in excess of the value of the identifiable assets.
business good will
_________ is determined by dividing income by the owners' equity.
net income to equity
_______________ is calculated by dividing projected net income excluding depreciation, interest, and other draws, by the best return expected in other investments.
income capitalization
A business' _____________ are its assets and liabilities that have no physical existence.
intangibles
A _____________ is a type of business transfer where the seller gets only a fraction of the value of the business.
sell off
A __________ is a type of business transfer where the owner gives the business to someone else without a payment.
pass off
People who open multiple businesses throughout his or her career are called __________ entrepreneurs.
serial
The _________ method reduces the value of the business' cash flow because they will be received in the future.
discounted cash flow
________________ is a commonsense rule or a rule of thumb.
heuristic
The vast major of start-ups are considered _________, where the idea is a common business in that community.
me too ventures
A ___________________ is the least version of the product that can be produced at a low cost and sod to customers in order to get feedback to improve upon the product.
minimum viable product
The Latin phrase ___________ ___________ means let the buyer beware.
cavaet emptor
_______________ is the practice of and ability to seize upon novel opportunities that become apparent during the conduct of business.
leverage contingencies
A _____________ is a form of business termination in which the firms legal or financial obligations are not fully met at closing.
workout
___________ is a combination in which the whole is greater than the sum of its component parts.
synergy
A ____________ is the seizing of control of a business by purchasing its stock to be able to select the board of directors.
takeover
A ____________ is an endgame strategy in which the owner closes down a business.
termination
One of the best predictors that a founder will be successful is ________________.
their level of experience
A __________ is an endgame strategy in which ownership is moved from one person or group to another.
transfer
T or F: The founder's early actions greatly increases the probability of running a successful start-up.
true
A ______________ is a business termination in which the entrepreneur ends his or her business with its obligations met.
walkaway
An __________ is something the business owns that is expected to have economic value in the future.
asset
A _____________ is an extreme form of business termination which uses a legal method for closing a business and paying off creditors when debts are substantially greater than assets.
bankruptcy
____________ reasoning is a logical process in which one analyzes the resources available and restraints on the use of resources to create an attainable goal.
effectual
An _________________ is a formalized legal method to transfer some or all of a business' ownership to its employees.
employee stock ownership plan (ESOP)
_____________ is an extension of net income to equity that explicitly includes the value of borrowed capital as a component of firm value.
net income to equity plus debt
Casual reasoning is also called __________ reasoning.
predictive
The __________ value is the cost to acquire an essentially identical asset.
replacement value
_____________ franchises are required to open a minimum number of stores within a specified time period.
master
According to Sarasvathy, what are the three critical principles in the effectual reasoning process?
leveraging of contingencies, strategic partnerships, affordable loss
Entrepreneurs who start-up a business from scratch will generally have to put up personal collateral in order to obtain a ____________ from a bank or credit union.
loan
UFOC stands for the uniform franchise ________ ________ and is a document that the franchiser must provide to each potential franchise.
offering circular
The _________ is the price at which a buyer is indifferent about buying or not buying a business.
point of indifference
The __________________ is calculated by dividing earnings before income tax by asset value.
pretax return on assets (ROA)
____________ is a credit agreement that allows a borrower to pay all or part of a loan's balance at any time.
revolving credit
A ____________ is a business that is created by separating part of an operating business into a separate entity.
spin off
A ___________ is a new business that is started from scratch.
start up
