Question 1

What does a break-even analysis tell the small business owner?

Accepted Answer

Business owners should know their firm's

Question 2

Financial ratios are a common tool used by over 50% of small business owners in the daily management of their businesses.

Accepted Answer

A) True 
 B)False

Question 3

The balance sheet is usually prepared on the ________ day of the month.

Accepted Answer

A) first 
B) last 
C) 15th 
D) None of the above 
A) first 
B) last 
C) 15th 
D) None of the above

Question 4

Projecting financial statements helps the small business owner to:

Accepted Answer

A) track and monitor current expenses. 
B) transform business goals into reality. 
C) calculate his/her return on the amount invested in the company. 
D) measure liquidity of the firm. 
A) track and monitor current expenses. 
B) transform business goals into reality. 
C) calculate his/her return on the amount invested in the company. 
D) measure liquidity of the firm.

Question 5

The company's average collection period ratio indicates the length of time the firm's cash is tied up in credit sales.

Accepted Answer

A) True 
 B)False

Question 6

In reviewing the company's balance sheet,Andy noticed that the total asset is stated as $5,500,000 and the total liability is $3,250,000.There is no paid-in capital or value for common stock.What are the company's retained earnings?

Accepted Answer

A) Can't determine with the information given 
B) $8,750,000 
C) $2,250,000 
D) There are no retained earnings 
A) Can't determine with the information given 
B) $8,750,000 
C) $2,250,000 
D) There are no retained earnings

Question 7

An above-average inventory turnover indicates that the business:

Accepted Answer

A) has an illiquid inventory. 
B) is healthy,with a salable inventory. 
C) needs to review its pricing policies. 
D) has below-average performance and is facing bankruptcy if not corrected quickly. 
A) has an illiquid inventory. 
B) is healthy,with a salable inventory. 
C) needs to review its pricing policies. 
D) has below-average performance and is facing bankruptcy if not corrected quickly.

Question 8

When a company is forced into liquidation,owners are most likely to incur a loss when selling:

Accepted Answer

A) accounts receivable. 
B) inventory. 
C) marketable securities. 
D) real estate. 
A) accounts receivable. 
B) inventory. 
C) marketable securities. 
D) real estate.

Question 9

Typically,slow payers represent great risk to many small businesses.

Accepted Answer

A) True 
 B)False

Question 10

The average inventory turnover ratio tells the owner how fast merchandise is moving through the business.

Accepted Answer

A) True 
 B)False

Question 11

________ ratios tell whether or not the small company will be able to meet its maturing obligations as they come due.

Accepted Answer

A) Leverage 
B) Profitability 
C) Liquidity 
D) Operating 
A) Leverage 
B) Profitability 
C) Liquidity 
D) Operating

Question 12

The quick ratio is the most commonly used measure for a small firm's short-term solvency.

Accepted Answer

A) True 
 B)False

Question 13

The rule for the balance sheet is:

Accepted Answer

A) Assets = Liabilities + Owner's Equity 
B) Assets - Liabilities = Owner's Equity 
C) Liabilities = Assets - Owner's Equity 
D) All of the above 
A) Assets = Liabilities + Owner's Equity 
B) Assets - Liabilities = Owner's Equity 
C) Liabilities = Assets - Owner's Equity 
D) All of the above

Question 14

A pro forma financial statement means:

Accepted Answer

A) looking at the current financial statement. 
B) looking at the past financial statement. 
C) preparing the current financial statement. 
D) preparing a projected financial statement. 
A) looking at the current financial statement. 
B) looking at the past financial statement. 
C) preparing the current financial statement. 
D) preparing a projected financial statement.

Question 15

What do leverage ratios measure? Name and explain three of them.

Accepted Answer

Leverage ratios measure the finan

Question 16

The balance sheet takes a "snapshot" of a business,providing owners with an estimate of the firm's worth on a given date.

Accepted Answer

A) True 
 B)False

Question 17

The most common method of creating a projected income statement is to develop a sales forecast and then "work down" to the bottom line.

Accepted Answer

A) True 
 B)False

Question 18

A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:

Accepted Answer

A) creating the pro forma. 
B) budgeting. 
C) break-even analysis. 
D) ratio analysis. 
A) creating the pro forma. 
B) budgeting. 
C) break-even analysis. 
D) ratio analysis.

Question 19

Net profit on sales ratio = Net sales / Net income.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is correct?

Accepted Answer

A) Assets - Liabilities = Equity 
B) Assets - Equity = Liabilities 
C) Assets = Liabilities + Equity 
D) All of the above 
A) Assets - Liabilities = Equity 
B) Assets - Equity = Liabilities 
C) Assets = Liabilities + Equity 
D) All of the above

Exam 14: Creating a Solid Financial Plan

What does a break-even analysis tell the small business owner?

Financial ratios are a common tool used by over 50% of small business owners in the daily management of their businesses.

The balance sheet is usually prepared on the ________ day of the month.

Projecting financial statements helps the small business owner to:

The company's average collection period ratio indicates the length of time the firm's cash is tied up in credit sales.

In reviewing the company's balance sheet,Andy noticed that the total asset is stated as $5,500,000 and the total liability is $3,250,000.There is no paid-in capital or value for common stock.What are the company's retained earnings?

An above-average inventory turnover indicates that the business:

When a company is forced into liquidation,owners are most likely to incur a loss when selling:

Typically,slow payers represent great risk to many small businesses.

The average inventory turnover ratio tells the owner how fast merchandise is moving through the business.

________ ratios tell whether or not the small company will be able to meet its maturing obligations as they come due.

The quick ratio is the most commonly used measure for a small firm's short-term solvency.

The rule for the balance sheet is:

A pro forma financial statement means:

What do leverage ratios measure? Name and explain three of them.

The balance sheet takes a "snapshot" of a business,providing owners with an estimate of the firm's worth on a given date.

The most common method of creating a projected income statement is to develop a sales forecast and then "work down" to the bottom line.

A technique that allows the small business owner to perform financial analysis by understanding the relationship between two accounting elements is called:

Net profit on sales ratio = Net sales / Net income.

Which of the following is correct?

Entrepreneurs: the Driving Force Behind Small Business

Ethics and Social Responsibility: Doing the Right Thing

Creativity and Innovation: Keys to Entrepreneurial Success

Strategic Management and the Entrepreneur

Choosing a Form of Ownership

Franchising and the Entrepreneur

Buying an Existing Business

New Business Planning Process: Feasibility Analysis,business Modeling,

Building a Bootstrap Marketing Plan

Creative Use of Advertising and Promotion

Pricing and Credit Strategies

Global Marketing Strategies

E-Commerce and Entrepreneurship

Managing Cash Flow

Sources of Equity Financing

Sources of Debt Financing

Location,layout,and Physical Facilities

Supply Chain Management

Managing Inventory

Staffing and Leading a Growing Company

Management Succession and Risk Management Strategies in the Family Business

The Legal Environment: Business Law and Government Regulation

Filters