Exam 8: Assessing a New Venture's Financial Strength and Viability

________ depict relationships between items on a firm's financial statements.

Southwest Airlines uses its assets very productively. Its turnaround time, or the time that its airplanes sit on their ground while they are being loaded and unloaded, is the lowest in the airline industry. In terms of the primary financial objectives of a firm, this attribute is a measure of Southwest's:

________ is the ability to earn a profit.

In the context of computing the cost of sales, the common way to do this is to use the percent-of-sales method, which is a method for expressing:

Match the financial objective with its correct definition.

Historical financial statements reflect past performance and are usually prepared on a quarterly and annual basis.

A firm's working capital is its:

The Savvy Entrepreneurial Firm boxed feature in Chapter 8 focuses on a scenario involving the selection of a new CEO for New Venture Fitness Drinks. The lesson learned from the feature was:

What is ratio analysis? Why is it important?

The statement of cash flows summarizes the changes in a firm's cash position for a specified period of time and details why the change occurred.

The same financial ratios used to evaluate a firm's historical financial statement should be used to evaluate the pro forma financial statements.

The ________ provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time.

The major categories of assets listed on a balance sheet include current assets, fixed assets, and other assets.

Samantha Diaz owns a seafood restaurant in Jacksonville, Florida. She is currently owed $15,000 by a corporation that she catered a meeting for and $2,000 on an overdue account. Samantha has $17,000 in:

Financial management deals with two things: raising money and managing a company's finances in a way that achieves the highest rate of return.

If a firm determines it can use the percentage-of-sales method and it follows the procedure described in the textbook, then the net result is that each expense item on its income statement (with the exception of those items that can be individually forecast) will grow at the same rate as sales. This approach is called the:

According to the textbook, the most practical way to interpret or make sense of a firm's historical financial statements is through:

The strength and vigor of a firm's overall financial posture is referred to as:

In the context of a firm's statement of cash flows, operating activities include the purchase, sale, or investment in fixed assets, such as real estate, equipment, and buildings.

Profitability is the ability to earn a profit.