________ management deals with managing a​ company’s finances in a way that achieves the highest rate of return.

A.

Financial

B.

Operational

C.

Marketing

D.

Mission

E.

Profit

A​ company’s _____ is money owed to it by its customers.

A.

accounts payable

B.

liquidity

C.

inventory

D.

accounts receivable

E.

debt

The four main financial objectives of a firm are​ profitability, liquidity,​ _____, and stability.

A.

fungibility

B.

payability

C.

affordability

D.

efficiency

E.

operatability

_____ is the strength and vigor of the​ firm’s overall financial posture.

A.

Affordability

B.

Liquidity

C.

Efficiency

D.

Profitability

E.

Stability

The Southwest Airlines quote​ “Our planes​ don’t make any money sitting on the groundlong dash

—we have to get them back into the​ air” relates to which of the main financial​ objectives?

A.

Affordability

B.

Stability

C.

Efficiency

D.

Liquidity

E.

Profitability

For a firm to be​ stable, it must not only earn a profit and remain liquid but also​ ________.

A.

keep its debt in check

B.

have a supplier focus

C.

have a business model

D.

have no debts

E.

have a mission statement

____ are an estimate of a​ firm’s future income and​ expenses, based on its past​ performance, its current​ circumstances, and its future plans.

A.

Forecasts

B.

Balance sheets

C.

Financial statements

D.

Business models

E.

Income statements

​_______, which depict relationships between items on a​ firm’s financial​ statements, are used to discern whether a firm is meeting its financial objectives and how it stacks up against its industry peers.

A.

Standards

B.

Budgets

C.

Pro formas

D.

Financial ratios

E.

Forecasts

The​ ____ is a report similar to the annual report except that it contains more detailed information about the​ company’s business.

A.

business plan

B.

financial

C.

operating

D.

​10-K

E.

budget

Historical financial statements include the income​ statement, the balance​ sheet, and the statement of​ _______.

A.

forecasts

B.

budgets

C.

cash flows

D.

processes

E.

products

The​ _______ reflects the results of the operations of a firm over a specified period of time.

A.

statement of cash flows

B.

forecast

C.

balance sheet

D.

budget

E.

income statement

The​ ____ ratio is a simple ratio that measures the price of a​ company’s stock against its earnings.

A.

stability

B.

current

C.

liquidity

D.

​P/E

E.

efficiency

If a company earned​ $1.50 a share and its stock is trading at​ $30, its​ P/E ratio is​ ____.

A.

45

B.

20

C.

10

D.

18

E.

15

If a firm has a net income of​ $131,000 and net sales of​ $586,000, its profit margin is​ ___.

A.

13.6 percent

B.

22.3 percent

C.

18.8 percent

D.

20 percent

E.

17.9 percent

A(n) _____ is a snapshot of a​ company’s assets,​ liabilities, and​ owners’ equity at a specific point in time.

A.

budget

B.

income statement

C.

statement of cash flows

D.

balance sheet

E.

financial statement

​_____ are assets used over a longer time​ frame, such as real estate and buildings.

A.

Current assets

B.

Fixed assets

C.

Entrepreneurial assets

D.

Goodwill assets

E.

Cash assets

Inventories are​ ____ assets.

A.

miscellaneous

B.

other

C.

current

D.

fixed

E.

corporate

​_____ include(s) obligations that are payable within a year.

A.

Private equity

B.

Current assets

C.

Miscellaneous assets

D.

Current liabilities

E.

​Owners’ equity

A​ company’s assets are recorded at cost rather than​ _______.

A.

fair market value

B.

historical price

C.

past price

D.

what was paid for

E.

profits

If a firm has a debt ratio of 40​ percent, it means that 40 percent of its​ ____ is financed by debt.

A.

total assets

B.

liabilities

C.

sales

D.

revenues

E.

current assets

A​ firm’s ______ provide the basis for its pro forma financial statements.

A.

revenues

B.

assets

C.

liabilities

D.

costs

E.

forecasts

A completely new​ firm’s forecast should be preceded in its business plan by an explanation of the sources of the numbers for the forecast and the assumptions used to generate them. This explanation is called​ ______.

A.

the feasibility analysis

B.

an assumptions sheet

C.

a pro forma statement

D.

the business model

E.

a budget

If a firm felt that its future sales would be a function of its advertising​ expenditures, the number of people who participated in intramural sports at the sports complexes near its​ restaurants, and the prices of its​ drinks, it could predict future sales using​ ____ as long as it had historical data for each of these variables.

A.

regression analysis

B.

percentdash

–ofdash

–sales method

C.

changing ratio method

D.

estimates

E.

constant ratio method

A​ firm’s breakdash

–even point is​ 60,000 units. Any units sold above​ 60,000 represent​ ____.

A.

escalating costs

B.

diminishing revenues

C.

additional costs

D.

diminishing returns

E.

profits

The pro forma​ ____ provides a firm a sense of how its activities will affect its ability to meet its shortdash

–term liabilities and how its finances will evolve over time.

A.

vision

B.

business model

C.

budget

D.

balance sheet

E.

mission

​______ refers to the fact that companies often falter because the people who start them​ aren’t able to adjust quickly enough to their new roles and because the firm lacks a​ “track record” with outside buyers and suppliers.

A.

Hubris

B.

Liability of newness

C.

Liability of foreignness

D.

Managerial overconfidence

E.

Entrepreneurial failure

Which of the following is a common mistake made in putting together a​ new-venture team?

A.

Hiring top managers and sharing ownership in the firm

B.

Placing qualified friends or family members in management positions

C.

Not presenting a​ “one-person team” philosophy

D.

Acknowledging that previous success in other industries does not automatically translate to your industry

E.

Presenting an​ “I am above the​ team” philosophy

Various people or groups form part of a newdash

–venture ​team; however,​ _____ are not one of them.

A.

lenders

B.

a board of directors

C.

suppliers

D.

a board of advisers

E.

key employees

​______ early decisions significantly affect the way an entrepreneurial venture is received and the manner in which the​ new-venture team takes shape.

A.

​Customers’

B.

​Stakeholders’

C.

​Suppliers’

D.

​Stockholders’

E.

​Founders’

Studies show that​ _______ percent of all new firms are started by more than one individual.

A.

20

B.

50 percent to 70

C.

100

D.

15

E.

10

A​ (n)_______ team means that members are diverse in terms of their abilities and experiences.

A.

heterogeneous

B.

entrepreneurial

C.

homogeneous

D.

hubris

E.

monogeneous

A founding team larger than​ ____ is typically too large to be practical.

A.

1

B.

10

C.

4

D.

2

E.

5

If the​ _____ of a firm have similar areas of​ expertise, it can be problematic.

A.

founders

B.

investors

C.

customers

D.

lenders

E.

suppliers

Prior entrepreneurial​ experience, relevant industry​ experience, and​ ____ are the attributes that strengthen the chances of a​ founder’s success.

A.

good home life

B.

good family background

C.

a good personality

D.

networking

E.

a high school education

The results of research studies somewhat consistently suggest that​ _______ is one of the most consistent predictors of future entrepreneurial performance.

A.

a nurturing home life

B.

good family background

C.

innocence

D.

prior entrepreneurial experience

E.

good looks

​_____ is building and maintaining relationships with people whose interests are similar to​ one’s own or with whom relationships could bring advantages to the firm.

A.

Moderating

B.

Modulating

C.

Navigating

D.

Networking

E.

Attributing

Which of the following is NOT a preferred attribute of a​ firm’s founder or​ founders?

A.

Higher education

B.

Relevant industry experience

C.

Prior academic experience

D.

Prior entrepreneurial experience

E.

Firm started by a team

Evidence suggests that important entrepreneurial skills are enhanced through​ ______.

A.

good family background

B.

higher education

C.

happy family life

D.

good upbringing

E.

lifestyle

One technique available to entrepreneurs to help prioritize their hiring needs is to maintain a​ _____.

A.

skills profile

B.

job description

C.

job bank

D.

job profile

E.

data bank

​A(n)_____ is a freelancer who provides​ administrative, technical, or creative assistance to clients remotely from a home office.

A.

intern

B.

extern

C.

employee

D.

virtual assistant

E.

job sharer

​A(n) ______ is a person who is in business for​ oneself, works on​ one’s own time with​ one’s own tools and​ equipment, and performs services for a number of clients.

A.

job sharer

B.

employee

C.

freeloader

D.

freelancer

E.

intern

​_____ programs provide firms a chance to​ “look” at a potential hire before making a formal commitment to that person.

A.

​Job-shadowing

B.

Internship

C.

Freelancer

D.

​Job-sharing

E.

Virtual assistant

Freelancers and virtual assistants are considered​ _______.

A.

key employees

B.

​rank-and-file employees

C.

employees

D.

independent contractors

E.

dependent contractors

If a new venture organizes as a​ corporation, it is legally required to have​ _________.

A.

suppliers

B.

a network board

C.

a board of professionals

D.

a board of directors

E.

a board of advisers

When an officer of a firm serves on the​ company’s Board, the officer is​ a(n) ________.

A.

fiduciary director

B.

inside director

C.

outside director

D.

stakeholder director

E.

ex officio director

One of the responsibilities of a​ firm’s board of directors is to​ _______.

A.

develop the business plan

B.

hire employees

C.

declare dividends

D.

find customers

E.

find suppliers

Which of the following is NOT an attribute of effective boards of​ directors?

A.

Indecisiveness

B.

Complementary mix of talents

C.

Strong communication with the CEO

D.

Strong ethics

E.

Customerdash–focused point of view

Which of the following is NOT an attribute of strong board​ members?

A.

A good academic record

B.

Pattern recognition skills

C.

Strong interpersonal communication skills

D.

Investment​ and/or operating experience

E.

Respected in the field

While​ a(n) ______ offers help in providing direction and​ advice, it possesses no legal responsibility for the firm and gives nonbinding advice.

A.

stakeholder board

B.

advisory board

C.

board of directors

D.

board of customers

E.

employee board

​A(n) ____ is an individual who gives professional or expert advice.

A.

consultant

B.

stakeholder

C.

employee

D.

intern

E.

virtual assistant