Question 1

The formula for calculating net profit margin is net profit/net sales (annual).

Accepted Answer

A) True 
 B)False

Question 2

The quick ratio is sometimes called the working capital ratio.

Accepted Answer

A) True 
 B)False

Question 3

Investors mainly want to see that entrepreneurs:

Accepted Answer

A) have inflated the projections. 
B) have realistic expectations about income and expenses. 
C) will make profit immediately. 
D) All of the above 
A) have inflated the projections. 
B) have realistic expectations about income and expenses. 
C) will make profit immediately. 
D) All of the above

Question 4

________ are those things that a business owes;they represent creditors' claims against the business.

Accepted Answer

A) Assets 
B) Liabilities 
C) Owners' equities 
D) Liquidities 
A) Assets 
B) Liabilities 
C) Owners' equities 
D) Liquidities

Question 5

John is reviewing the company's costs and expenses against revenue for the last year.John is reviewing the firm's:

Accepted Answer

A) balance sheet. 
B) income statement. 
C) sources and uses of funds statement. 
D) pro forma. 
A) balance sheet. 
B) income statement. 
C) sources and uses of funds statement. 
D) pro forma.

Question 6

What is the value of ratio analysis to the small business owner and what are the four categories of ratios he/she can use?

Accepted Answer

The ratio analysis helps the small busin

Question 7

Bill is studying those expenses that contribute directly to manufacturing and distribution of goods.He's reviewing:

Accepted Answer

A) cost of goods. 
B) general expenses. 
C) operating expenses. 
D) current liabilities. 
A) cost of goods. 
B) general expenses. 
C) operating expenses. 
D) current liabilities.

Question 8

All costs directly related to the manufacture and distribution of goods are covered under general expenses.

Accepted Answer

A) True 
 B)False

Question 9

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

Accepted Answer

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

Question 10

As a company's debt-to-net worth ratio approaches 1:1,its creditors' interest in that business approaches that of the owners'.

Accepted Answer

A) True 
 B)False

Question 11

As a general rule,financial analysts suggest that a small business maintain a(n)________ ratio of at least 2:1.

Accepted Answer

A) debt-to-net worth 
B) current 
C) inventory turnover 
D) quick 
A) debt-to-net worth 
B) current 
C) inventory turnover 
D) quick

Question 12

Sales turnover ratio = Credit sales (or net sales)/Accounts receivable.

Accepted Answer

A) True 
 B)False

Question 13

What are liquidity ratios and how are they used by the small business owner? Name and briefly explain the current and quick ratios.

Accepted Answer

Liquidity ratios tell whether a s

Question 14

The balance sheet represents: Assets = Liabilities + Depreciation + Equity.

Accepted Answer

A) True 
 B)False

Question 15

In the balance sheet,the current assets consist of:

Accepted Answer

A) accounts payable. 
B) inventory. 
C) revenue. 
D) All of the above 
A) accounts payable. 
B) inventory. 
C) revenue. 
D) All of the above

Question 16

The net profit on sales ratio (also called the profit margin on sales)measures the firm's profit per dollar of sales.

Accepted Answer

A) True 
 B)False

Question 17

________ is (are)the value of the owner's investment in the business.

Accepted Answer

A) Assets 
B) Liabilities 
C) Owner's Equity 
D) Profit 
A) Assets 
B) Liabilities 
C) Owner's Equity 
D) Profit

Question 18

When a firm's ratios vary from the average ratios of similar firms in the industry,this indicates that the small business is in financial jeopardy.

Accepted Answer

A) True 
 B)False

Question 19

There is a direct 1:1 relationship between a company's expected average inventory turnover ratio and the amount of cash required to launch it.

Accepted Answer

A) True 
 B)False

Question 20

Small businesses with high leverage ratios are less vulnerable to economic downturns,but they have a lower potential for large profits.

Accepted Answer

A) True 
 B)False

Exam 14: Creating a Solid Financial Plan

The formula for calculating net profit margin is net profit/net sales (annual).

The quick ratio is sometimes called the working capital ratio.

Investors mainly want to see that entrepreneurs:

________ are those things that a business owes;they represent creditors' claims against the business.

John is reviewing the company's costs and expenses against revenue for the last year.John is reviewing the firm's:

What is the value of ratio analysis to the small business owner and what are the four categories of ratios he/she can use?

Bill is studying those expenses that contribute directly to manufacturing and distribution of goods.He's reviewing:

All costs directly related to the manufacture and distribution of goods are covered under general expenses.

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

As a company's debt-to-net worth ratio approaches 1:1,its creditors' interest in that business approaches that of the owners'.

As a general rule,financial analysts suggest that a small business maintain a(n)________ ratio of at least 2:1.

Sales turnover ratio = Credit sales (or net sales)/Accounts receivable.

What are liquidity ratios and how are they used by the small business owner? Name and briefly explain the current and quick ratios.

The balance sheet represents: Assets = Liabilities + Depreciation + Equity.

In the balance sheet,the current assets consist of:

The net profit on sales ratio (also called the profit margin on sales)measures the firm's profit per dollar of sales.

________ is (are)the value of the owner's investment in the business.

When a firm's ratios vary from the average ratios of similar firms in the industry,this indicates that the small business is in financial jeopardy.

There is a direct 1:1 relationship between a company's expected average inventory turnover ratio and the amount of cash required to launch it.

Small businesses with high leverage ratios are less vulnerable to economic downturns,but they have a lower potential for large profits.

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

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