Question 1

In the build-up method, you look at the revenue you might generate and the cost you might incur in a typical day.

Accepted Answer

A) True 
 B)False

Question 2

In the comparable method, you look at how your company compares to industry averages and benchmark companies.

Accepted Answer

A) True 
 B)False

Question 3

Seldom are revenues in retail spread evenly across the calendar year.

Accepted Answer

A) True 
 B)False

Question 4

It is critical to show the pro-forma projections on a monthly basis when a company is:

Accepted Answer

A) Experiencing negative cash flow 
B) Not earning any revenue 
C) Most vulnerable to failure 
D) Facing strong competition 
E) Managing an inventory-to-asset ratio of 10% or higher 
A) Experiencing negative cash flow 
B) Not earning any revenue 
C) Most vulnerable to failure 
D) Facing strong competition 
E) Managing an inventory-to-asset ratio of 10% or higher

Question 5

Entrepreneurs who claim their estimates are "conservative" are usually overly optimistic about their ventures' future.

Accepted Answer

A) True 
 B)False

Question 6

Businesses should expect to build their sales and start operating efficiently within a five-year period.

Accepted Answer

A) True 
 B)False

Question 7

Gross margin is calculated with the formula

Accepted Answer

A) Revenue plus COGS 
B) Gross Profit times COGS 
C) Price plus Gross Profit 
D) Revenue minus COGS 
E) Revenue times profit 
A) Revenue plus COGS 
B) Gross Profit times COGS 
C) Price plus Gross Profit 
D) Revenue minus COGS 
E) Revenue times profit

Question 8

Investors often predict the market share of startups as 3% after Year 3, because of the ease with which 3% can be captured.

Accepted Answer

A) True 
 B)False

Question 9

When we graph costs over time, we see them decreasing exponentially.

Accepted Answer

A) True 
 B)False

Question 10

According to the chapter, the process of creating a detailed schedule of every operating expense is called:

Accepted Answer

A) Clarifying 
B) Purifying 
C) Refining 
D) Polishing 
E) Improving 
A) Clarifying 
B) Purifying 
C) Refining 
D) Polishing 
E) Improving

Question 11

What effect can selling on credit have on your business?

Accepted Answer

A) Reduce assets 
B) Decrease accounts payable 
C) Delay cash inflows 
D) Reduce liabilities 
E) Increase inventory 
A) Reduce assets 
B) Decrease accounts payable 
C) Delay cash inflows 
D) Reduce liabilities 
E) Increase inventory

Question 12

How long should the explanation of the financial statements be?

Accepted Answer

A) 1 page 
B) 2 - 3 pages 
C) 10 - 15 pages 
D) Approximately 20 pages 
E) 25 - 30 pages 
A) 1 page 
B) 2 - 3 pages 
C) 10 - 15 pages 
D) Approximately 20 pages 
E) 25 - 30 pages

Question 13

If a business is profitable and growing, which of the following is most likely to be a reason for failure?

Accepted Answer

A) High COGS 
B) Low clientele 
C) Strong competition 
D) Failure to estimate the size of the market 
E) Insufficient financing 
A) High COGS 
B) Low clientele 
C) Strong competition 
D) Failure to estimate the size of the market 
E) Insufficient financing

Question 14

Gross profit margin can be calculated by dividing the Cost of Goods Sold by Total Revenues.

Accepted Answer

A) True 
 B)False

Question 15

Under the Build-Up Method, you should start with the:

Accepted Answer

A) Income statement 
B) Balance Sheet 
C) Statement of Cash Flows 
D) Industry averages 
E) None of the above 
A) Income statement 
B) Balance Sheet 
C) Statement of Cash Flows 
D) Industry averages 
E) None of the above

Question 16

It is possible to have negative earnings on the income statement and a positive statement of cash flows.

Accepted Answer

A) True 
 B)False

Question 17

What is the purpose of creating a headcount table?

Accepted Answer

A headcount schedule is an important ste

Question 18

Explain why it is important to construct pro forma financial statements for new ventures.

Accepted Answer

a.Building pro forma statements helps a

Question 19

Which of the following can be used to strengthen your assumptions?

Accepted Answer

A) Industry research 
B) Competitor analysis 
C) Own observations 
D) Surveying customers 
E) All of the above 
A) Industry research 
B) Competitor analysis 
C) Own observations 
D) Surveying customers 
E) All of the above

Question 20

Which of the following is not a common mistake of entrepreneurs?

Accepted Answer

A) Underestimating costs 
B) Finding a lack of comparable companies 
C) Underestimating the time required to secure financing 
D) Underestimating power of going public 
E) Expecting to generate revenues within too short of a timeframe 
A) Underestimating costs 
B) Finding a lack of comparable companies 
C) Underestimating the time required to secure financing 
D) Underestimating power of going public 
E) Expecting to generate revenues within too short of a timeframe

In the build-up method, you look at the revenue you might generate and the cost you might incur in a typical day.

In the comparable method, you look at how your company compares to industry averages and benchmark companies.

Seldom are revenues in retail spread evenly across the calendar year.

It is critical to show the pro-forma projections on a monthly basis when a company is:

Entrepreneurs who claim their estimates are "conservative" are usually overly optimistic about their ventures' future.

Businesses should expect to build their sales and start operating efficiently within a five-year period.

Gross margin is calculated with the formula

Investors often predict the market share of startups as 3% after Year 3, because of the ease with which 3% can be captured.

When we graph costs over time, we see them decreasing exponentially.

According to the chapter, the process of creating a detailed schedule of every operating expense is called:

What effect can selling on credit have on your business?

How long should the explanation of the financial statements be?

If a business is profitable and growing, which of the following is most likely to be a reason for failure?

Gross profit margin can be calculated by dividing the Cost of Goods Sold by Total Revenues.

Under the Build-Up Method, you should start with the:

It is possible to have negative earnings on the income statement and a positive statement of cash flows.

What is the purpose of creating a headcount table?

Explain why it is important to construct pro forma financial statements for new ventures.

Which of the following can be used to strengthen your assumptions?

Which of the following is not a common mistake of entrepreneurs?

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Facing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship: an Overview

Filters

Exam 8: Building Your Pro Forma Financial Statements

In the build-up method, you look at the revenue you might generate and the cost you might incur in a typical day.

In the comparable method, you look at how your company compares to industry averages and benchmark companies.

Seldom are revenues in retail spread evenly across the calendar year.

It is critical to show the pro-forma projections on a monthly basis when a company is:

Entrepreneurs who claim their estimates are "conservative" are usually overly optimistic about their ventures' future.

Businesses should expect to build their sales and start operating efficiently within a five-year period.

Gross margin is calculated with the formula

Investors often predict the market share of startups as 3% after Year 3, because of the ease with which 3% can be captured.

When we graph costs over time, we see them decreasing exponentially.

According to the chapter, the process of creating a detailed schedule of every operating expense is called:

What effect can selling on credit have on your business?

How long should the explanation of the financial statements be?

If a business is profitable and growing, which of the following is most likely to be a reason for failure?

Gross profit margin can be calculated by dividing the Cost of Goods Sold by Total Revenues.

Under the Build-Up Method, you should start with the:

It is possible to have negative earnings on the income statement and a positive statement of cash flows.

What is the purpose of creating a headcount table?

Explain why it is important to construct pro forma financial statements for new ventures.

Which of the following can be used to strengthen your assumptions?

Which of the following is not a common mistake of entrepreneurs?

The Power of Entrepreneurship

The Entrepreneurial Process

Opportunity Recognition, Shaping, and Reshaping

Understanding Your Business Model and Developing Your Strategy

Entrepreneurial Marketing

Building the Founding Team

The Business Planning Process

Facing Entrepreneurial Ventures Worldwide

Raising Money for Starting and Growing Businesses

Debt and Other Forms of Financing

Legal and Tax Issues, Including Intellectual Property

Entrepreneurial Growth

Social Entrepreneurship: an Overview

Filters