Exam 14: Creating a Solid Financial Plan

Describe a pro forma statement,identifying the types of pro forma statements a small business owner could use,and how the small business owner would create each.

Which of the following would be a sign that a company is overextended in its debt?

The ________ ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities.

Most small businesses start out strong financially because of the care generally given in determining the total asset requirements for running the business.

Leverage ratios are a gauge of the depth of a company's debt.

________ publishes Annual Statement Studies,showing ratios and other financial data for over 750 different industrial,retail,and wholesale categories.

In the balance sheet,intangible assets include items such as:

In which statement are the account balances reversed to zero on a monthly basis?

To determine sales revenue,the owner records sales revenue for the year and subtracts liabilities.

________ are those things that a business owns which have value.

A low inventory turnover ratio demonstrates that the firm's inventory is liquid and its pricing policies are accurate.

Many business owners whose companies are losing money mistakenly believe that the problem is inadequate sales volume;therefore,they focus on pumping sales at any cost.

Explain the three basic financial reports that a business uses in building a financial statement: the balance sheet,the income statement,and the statement of cash flows.What information is contained in each,what is their value to the small business owner,and how are they used to build financial statements?