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Question 1
create a sales forecast.
determine a reasonable salary and return on investment in the company.
find published figures on the specific type of business in order to forecast sales.
figure out operating costs and make a realistic sales estimate.
2 points
Question 2
Liquidity
Leverage
Operating
Profitability
2 points
Question 3
current
quick
turnover
net profit
2 points
Question 4
the difference between the total sources available to the owner and the total uses of those assets.
listed as a source of funds because it is a noncash expense, deducted as a cost of doing business.
the owner’s total investment at the company’s inception plus retained earnings.
creditors’ total claims against the firm’s assets.
2 points
Question 5
Assets; liabilities
Liabilities; assets
Ratios; equities
Equities; liabilities
2 points
Question 6
wait patiently; the customer will most likely pay the bill sooner or later.
turn the account over to a collection agency the day it becomes past due.
contact the customer immediately, ask for full payment, and set a deadline.
call the “deadbeat” in the middle of the night and make harassing and threatening remarks until he pays.
2 points
Question 7
it is relatively inexpensive and simple.
it is expensive and requires a great deal of effort.
it is essentially borrowing money from the customer.
many can get by without selling on credit because their business customers don’t expect to use credit.
2 points
Question 8
profit.
net income.
accounts receivable and payable.
cash flow.
2 points
Question 9
it should be a monthly plan, projected out for 3 years.
the more variable the sales pattern, the shorter the planning horizon should be.
it should be quarterly estimates for a period of 1 year.
it is a verbal or mental “document” in order to permit maximum flexibility.
2 points
Question 10
keeping the inventory lean.
reduction in inventory turn over ratio.
paying expenses on time.
All of the above
2 points
Question 11
working
fixed
growth
asset-based
2 points
Question 12
networking.
using the SBA as a contact point.
searching the web.
using business incubators’ computer matching services.
2 points
Question 13
private investors or “angels.”
loans from commercial banks.
the entrepreneur’s pool of personal savings.
public stock issues.
2 points
Question 14
they tend to demand more stock options.
familial seniority often conflicts with the “chain of command.”
they require more leniency with benefits and pay.
unrealistic expectations or misunderstood risks destroy friendships or family relationships.
2 points
Question 15
wealthy individuals.
entrepreneurs.
persons who invest in business startups in exchange for equity stakes in the companies.
All of the above
2 points
Question 16
The Direct Loan
CDC
Immediate Participation Loan
CAPLine
2 points
Question 17
pledges its accounts receivable as collateral to obtain a loan from a financial institution.
relies on a third-party consultant to apply for SBA-guaranteed loans.
sells its accounts receivable to a third party to get the capital it needs.
borrows money from lenders by offering them the option to convert the loan into stock in the company.
2 points
Question 18
to borrow up to 100% of the value of their inventory or their accounts receivable for the money they need for long-term goals.
to use normally unproductive assets—accounts receivable and inventory.
to obtain loans more easily but with less borrowing power than if they used an unsecured line of credit.
access to a source of funds ideally suited for long-term financing needs.
2 points
Question 19
private placement
industrial revenue bond
504 loan
zero coupon bond
2 points
Question 20
SBIC
private placement
credit union
insurance company
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