Exam 11: Financial Preparation for Entrepreneurial Ventures

Which of the following is not used in balance sheet ratios?

Vertical analysis is the application of ratio analysis to the many sets of financial statements.

Define break-even analysis, and identify some useful methods for finding the break-even point.

_____ analysis looks at financial statements and ratios over time.

Which of the following is the first step in the preparation of the cash-flow budget?

The process of preparing a pro forma balance sheet is

Explain what a cash-flow budget tells a manager/owner.

Break-even analysis is used to tell how many units must be sold in order to break even at a particular selling price.

After the operating budget has been prepared, an entrepreneur can proceed to the next phase of the budget process, which is the cash-flow budget.

Which of the following statements about financial assumptions is not true?

An entrepreneur must graph at least two numbers-total sales and total expenses-when using the graphic approach for break-even analysis.

Loan proceeds are not directly tied to

It is typical for a firm to prepare an operating budget but not a cash-flow budget.

The rate used to adjust future cash flows to determine their value in present period terms is the

A budget that is a statement of estimated income and expenses over a specified period of time is referred to as a(n) _____ budget.

More established ventures will use a sales forecast model where the estimation of current sales will increase a certain percentage over the prior period's sales. This percentage is based upon

The cash flow does not come from

The typical business will have cash inflows from three sources: cash sales, cash payments received on account, and loan proceeds.

Break-even analysis is used to assess

The net present value method works on the premise that a dollar today