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

BLMA Models, the company profiled in the opening feature in Chapter 8, sells model trains and model train accessories. According to the feature, the biggest challenge the company has faced is:

Real estate, buildings, equipment and furniture are classified as ________ on a company's balance sheet.

The Partnering for Success feature in Chapter 8 focuses on buying groups, and recommends that small businesses seek out buying groups to participate in. What is a "buying group" in the context of the feature?

________ are an estimate of a firm's future income and expenses, based on its past performance, its current circumstances, and its future plans.

A firm's ________ is its current assets divided by its current debt.

The break-even point for a new restaurant or product is the point where the total revenue received equals total costs associated with the output of the restaurant of the sale of the product.

________ reflect past performance and are usually prepared on a quarterly and annual basis.

Efficiency is a company's ability to meet its short-term financial obligations.

In the context of a firm's statement of cash flows, ________ include cash raised during the period by borrowing money or selling stock an/or cash used during the period by paying dividends, buying back outstanding stock, or buying back outstanding bonds.

According to the textbook, the most important function of the pro forma statement of cash flows is to project whether the firm will have sufficient:

A company's ability to meet its short-term financial obligations is referred to as:

Pro forma financial statements are projections for future periods based on forecasts and are typically completed for 2 to 3 years in the future.

Describe the purpose of the income statement, the balance sheet, and the statement of cash flows.

In regard to budgets, which of the following statements is not true?

Cash plus items that are readily convertible to cash, such as accounts receivable, marketable securities, and inventories are classified as ________ on a firm's balance sheet.

Budgets are itemized forecasts of a company's income, expenses, and capital needs and are also an important tool for financial planning and control.

Financial management deals with two thingsraising money and:

A financial statement is a(n):

What are forecasts? What role do they play in the preparation of pro form financial statements?

A firm's pro forma financial statements are similar to its historical financial statements except that: