Question 1

Return on investment

Accepted Answer

A) is net profit divided by investment. 
B) provides a replacement value. 
C) establishes a value for the business. 
D) is equal to the current prime rate. 
A) is net profit divided by investment. 
B) provides a replacement value. 
C) establishes a value for the business. 
D) is equal to the current prime rate. A

Question 2

Avoiding start-up costs is a factor to consider when valuing a business.

Accepted Answer

A) True 
 B)False  True

Question 3

Vesting on founders' stock refers to holders of preferred stock having the right to purchase additional shares when issued by the company.

Accepted Answer

A) True 
 B)False  False

Question 4

Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

Accepted Answer

A) True 
 B)False

Question 5

_____ gives investors some protection against founders selling their interest to a third party.

Accepted Answer

A) Right of first refusal 
B) A voting right 
C) A registration right 
D) A co-sale right 
A) Right of first refusal 
B) A voting right 
C) A registration right 
D) A co-sale right

Question 6

The price/earnings ratio is a method of valuation that is mostly used

Accepted Answer

A) with publicly held corporations. 
B) when competition is high. 
C) for sensitive market conditions. 
D) for small corporations. 
A) with publicly held corporations. 
B) when competition is high. 
C) for sensitive market conditions. 
D) for small corporations.

Question 7

Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid

Accepted Answer

A) start-up costs. 
B) earlier losses. 
C) previous profits. 
D) legal fees. 
A) start-up costs. 
B) earlier losses. 
C) previous profits. 
D) legal fees.

Question 8

The adjusted tangible book value includes all of the following except

Accepted Answer

A) goodwill. 
B) patents. 
C) common price. 
D) deferred financing costs. 
A) goodwill. 
B) patents. 
C) common price. 
D) deferred financing costs.

Question 9

When considering management, the entrepreneur should be concerned about

Accepted Answer

A) ownership positions. 
B) pension and profit sharing. 
C) the total number of employees. 
D) employee benefits. 
A) ownership positions. 
B) pension and profit sharing. 
C) the total number of employees. 
D) employee benefits.

Question 10

Which of the following is a reason for buyers to keep projections in perspective?

Accepted Answer

A) vague histories 
B) fluctuating markets 
C) certain environments 
D) start-up costs 
A) vague histories 
B) fluctuating markets 
C) certain environments 
D) start-up costs

Question 11

Knowing a venture's pre-money valuation is not possible.

Accepted Answer

A) True 
 B)False

Question 12

Buyers and sellers assign different values to a business.

Accepted Answer

A) True 
 B)False

Question 13

Which of the followings venture valuation methods is the most effective if the business being valued needs to generate a return greater than investment?

Accepted Answer

A) adjusted tangible assets 
B) price/earnings 
C) discounted future earnings 
D) replacement value 
A) adjusted tangible assets 
B) price/earnings 
C) discounted future earnings 
D) replacement value

Question 14

_____ refers to conducting a thorough analysis of every facet of an existing business.

Accepted Answer

A) Due diligence 
B) Industry capitalization 
C) Knowledge acquisition 
D) Risk assessment 
A) Due diligence 
B) Industry capitalization 
C) Knowledge acquisition 
D) Risk assessment

Question 15

Which of the following hidden costs are involved when establishing the value of a firm?

Accepted Answer

A) insufficient controls and costs 
B) divergent expenses 
C) personal expenses 
D) travel expenses 
A) insufficient controls and costs 
B) divergent expenses 
C) personal expenses 
D) travel expenses

Question 16

The primary advantage of the price/earnings approach to valuation is that it

Accepted Answer

A) reflects "top value" of the firm. 
B) pays off assets and sells liabilities. 
C) assumes business begins operations. 
D) is simple to use. 
A) reflects "top value" of the firm. 
B) pays off assets and sells liabilities. 
C) assumes business begins operations. 
D) is simple to use.

Question 17

Which of the following provides an absolute bottom line value of a firm?

Accepted Answer

A) return on investment 
B) price/earnings ratio 
C) market value 
D) liquidation value 
A) return on investment 
B) price/earnings ratio 
C) market value 
D) liquidation value

Question 18

A business valuation is not usually essential when

Accepted Answer

A) giving a gift of stock. 
B) going public. 
C) selling a business division. 
D) hiring a new director of operations. 
A) giving a gift of stock. 
B) going public. 
C) selling a business division. 
D) hiring a new director of operations.

Question 19

When considering physical facilities, the entrepreneur should be concerned about

Accepted Answer

A) which facilities are owned versus leased. 
B) which facilities are used for production. 
C) whether adequate capital is maintained. 
D) facility upkeep. 
A) which facilities are owned versus leased. 
B) which facilities are used for production. 
C) whether adequate capital is maintained. 
D) facility upkeep.

Question 20

If cash flow is deemed to be the most important consideration in buying a business, which of the following valuation methods is likely to be used?

Accepted Answer

A) adjusted tangible assets 
B) price/earnings 
C) high equity/low debt 
D) discounted future earnings 
A) adjusted tangible assets 
B) price/earnings 
C) high equity/low debt 
D) discounted future earnings

Return on investment

Avoiding start-up costs is a factor to consider when valuing a business.

Vesting on founders' stock refers to holders of preferred stock having the right to purchase additional shares when issued by the company.

Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

_____ gives investors some protection against founders selling their interest to a third party.

The price/earnings ratio is a method of valuation that is mostly used

Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid

The adjusted tangible book value includes all of the following except

When considering management, the entrepreneur should be concerned about

Which of the following is a reason for buyers to keep projections in perspective?

Knowing a venture's pre-money valuation is not possible.

Buyers and sellers assign different values to a business.

Which of the followings venture valuation methods is the most effective if the business being valued needs to generate a return greater than investment?

_____ refers to conducting a thorough analysis of every facet of an existing business.

Which of the following hidden costs are involved when establishing the value of a firm?

The primary advantage of the price/earnings approach to valuation is that it

Which of the following provides an absolute bottom line value of a firm?

A business valuation is not usually essential when

When considering physical facilities, the entrepreneur should be concerned about

If cash flow is deemed to be the most important consideration in buying a business, which of the following valuation methods is likely to be used?

Entrepreneurship Evolutionary Development--Revolutionary Impact

The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics

The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship

Social Entrepreneurship and the Global Environment for Entrepreneurship

Innovation: the Creative Pursuit of Ideas

Assessment of Entrepreneurial Opportunities

Pathways to Entrepreneurial Ventures

Sources of Capital for Entrepreneurial Ventures

Legal Challenges for Entrepreneurial Ventures

Marketing Research for Entrepreneurial Ventures

Financial Preparation for Entrepreneurial Ventures

Developing an Effective Business Plan

Strategic Entrepreneurial Growth

Harvesting Entrepreneurial Ventures

Filters

Exam 14: Valuation of Entrepreneurial Ventures

Return on investment

Avoiding start-up costs is a factor to consider when valuing a business.

Vesting on founders' stock refers to holders of preferred stock having the right to purchase additional shares when issued by the company.

Increasing market share by acquiring a firm in the company's industry is one reason for the acquisition.

_____ gives investors some protection against founders selling their interest to a third party.

The price/earnings ratio is a method of valuation that is mostly used

Some buyers are willing to pay more for a business than what valuation methods determine its worth to be to avoid

The adjusted tangible book value includes all of the following except

When considering management, the entrepreneur should be concerned about

Which of the following is a reason for buyers to keep projections in perspective?

Knowing a venture's pre-money valuation is not possible.

Buyers and sellers assign different values to a business.

Which of the followings venture valuation methods is the most effective if the business being valued needs to generate a return greater than investment?

_____ refers to conducting a thorough analysis of every facet of an existing business.

Which of the following hidden costs are involved when establishing the value of a firm?

The primary advantage of the price/earnings approach to valuation is that it

Which of the following provides an absolute bottom line value of a firm?

A business valuation is not usually essential when

When considering physical facilities, the entrepreneur should be concerned about

If cash flow is deemed to be the most important consideration in buying a business, which of the following valuation methods is likely to be used?

Entrepreneurship Evolutionary Development--Revolutionary Impact

The Entrepreneurial Mind-Set in Individuals: Cognition and Ethics

The Entrepreneurial Mind-Set in Organizations: Corporate Entrepreneurship

Social Entrepreneurship and the Global Environment for Entrepreneurship

Innovation: the Creative Pursuit of Ideas

Assessment of Entrepreneurial Opportunities

Pathways to Entrepreneurial Ventures

Sources of Capital for Entrepreneurial Ventures

Legal Challenges for Entrepreneurial Ventures

Marketing Research for Entrepreneurial Ventures

Financial Preparation for Entrepreneurial Ventures

Developing an Effective Business Plan

Strategic Entrepreneurial Growth

Harvesting Entrepreneurial Ventures

Filters