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Study Resources (Business Management)

  122) A checking account that never has idle funds (because it draws funds from an interest-bearing master account to cover checks written) is called a ________ account. A) zero-balance B) money market C) deficit D) sweep 123) A sweep account is a checking account that ________. A) bears interest, allowing depositors to write checks without tying.
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  106) You are provided this information about a retail store called "BoardSports:" BoardSportsIndustry Mean Current Ratio1.5 : 12: 1 Quick Ratio.75 : 11 : 1 Debt Ratio0.87 : 10.75 : 1 Average Collection Ratio46 days33 days Net Profit on Sales Ratio5.5%8.2% Net Profit to Equity Ratio7.7%13.2% What can you reasonably assess about the current financial status of this.
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  21) The first place an entrepreneur should look for startup capital is ________. A) a bank B) a venture capitalist C) the Small Business Administration D) his own savings 22) A method of raising capital that taps the power of social networking and allows entrepreneurs to post their elevator pitches and proposed investment terms on.
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  Mini-Case 12-2: The Laurens Corporation In past years, Sue Salgado, owner of the Laurens Corporation, has been plagued by unexpected cash flow problems. Her banker, worried about her lack of cash flow management, has suggested that Sue create a cash budget for the upcoming quarter. Sue does this, using the following.
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  132) Companies lose billions of dollars each year due to employee theft. 133) Rather than build the current year's budget on increases from the previous year's budget, zero-based budgeting starts from a budget of zero and evaluates the necessity of every item. 134) To deter employee theft, it is best to separate.
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  21) The difference between the total sources of funds and the total uses of funds represents the increase or decrease in a firm's working capital. 22) Explain the three basic financial reports that a small business uses in building a financial plan: the balance sheet, the income statement, and the statement.
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  64) An important source of credit information that collects information on small businesses that other reporting services ignore is ________. A) National Association of Credit Management B) TRW C) Dun & Bradstreet D) National Association of Small Business Owners 65) According to the American Collectors Association, if a business is writing off more than ________.
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  116) The break-even point ________. A) occurs where a company's total revenue equals its total expenses B) is the point at which a company neither earns a profit nor incurs a loss C) tells a business owner the minimum level of activity needed to keep her company in operation D) All of the above 117).
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  50) A high debt ratio ________. A) means that creditors provide a large percentage of the company's total financing B) gives a small business more borrowing capacity C) decreases the chances that creditors will lose money if the business is liquidated D) represents a lower risk to potential lenders and creditors 51) Which ratio would.
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  94) The Boat and Ski Shop, a small retail boat shop, would most likely rely on which of the following methods to finance its inventory? A) Discounted installment contracts B) Floor planning C) Installment loans D) Trade credit 95) A bank loan that imposes restrictions or covenants on the business decisions an entrepreneur makes concerning.
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  84) Because of the risk/return tradeoff, small businesses that borrow money repay it with interest at the ________. A) prime interest rate B) prime interest rate minus a few percentage points C) prime interest rate plus a few percentage points D) lender's cost of capital 85) For small businesses, ________ are the very heart of.
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    1) The first phase of determining where to locate a business is ________. A) choosing a state in which the business owner wants to live B) determining which city has the demographics that best fit the business C) conducting a specific site analysis D) determining which regions of the country are experiencing growth 2) The.
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  11) Rather than relying primarily on a single source of funds as they have in the past, entrepreneurs today must piece together their capital from multiple sources, a method known as layered financing. 12) Most entrepreneurs seeking money to launch their businesses need more than $1,000,000 in startup capital. 13) Capital is.
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    1) Solid cash management enables a business owner to ________. A) adequately meet the cash demands of the business B) avoid retaining unnecessarily large cash balances C) stretch the profit-generating power of each dollar the business owns D) All of the above 2) ________ is the most important, yet least productive, asset that a small.
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  136) Compute a break-even point in dollars. Mini-Case 11-4: Calculating the Break-even Point A small manufacturer plans to sell tents for $120 each. The variable cost for each tent is $90. Fixed costs for the process are estimated to be $36,000. How many tents must the company sell to break-even? 137) Suppose that.
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  131) What are the advantages and the disadvantages of using break-even analysis? Mini-Case 11-1: Bowden Brake Service (Part A) Jim Bowden, owner of Bowden Brake Service, is planning to expand his six-year-old brake service to include tune-ups and tire services. Based on budget estimates for the upcoming year, Jim expects net sales.
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  Mini-Case 13-2: Bowden Brake Service Jim Bowden has been operating his business for some time now and thinks it is time to grow and expand. To compute the cost of expanding his existing business, Jim Bowden makes the following estimates: Adjacent lot$40,000 Metal prefab building25,000 Hydraulic lifts15,000 Tools and equipment9,000 Parts and inventory5,000 Additional operating expenses55,000 TOTAL$149,000 107) Explain.
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  104) Because inventory is not a liquid asset, cash invested there is tied up and cannot be used for other purposes. 105) Only about 20 percent of a typical business' inventory turns over quickly. 106) Roughly 80 percent of the typical business' inventory turns over quickly. 107) It is much wiser to carry.
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  57) How are sales forecasts developed for an established business? How are sales forecasts developed for a new business enterprise? 58) By planning cash needs ahead of time, a small business is able to achieve all but which of the following? A) Make the most efficient use of available cash. B) Provide the.
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  38) The end-of-the-month balances for months 1, 2, and 3, respectively are ________. A) $5,293, $4,865, and $1,402 B) $6,519, $8,195, and $6,224 C) -$10,541, -$12,524, and -$16,771 D) $32,109, $61,085, and $87,314 39) A cash budget allows a small business owner to anticipate cash shortages and cash surpluses and gives her/him time to handle,.
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  60) For the most meaningful interpretation, the small business owner should compare her/his firm's average collection period to ________. A) other businesses in the same geographic area B) a direct competitor C) the universal standard of 25 days D) the average for the industry and the firm's credit terms 61) A business with a payables.
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  104) Explain the role that commercial banks play in financing small businesses. What kinds of loans do banks offer small companies? Christine Hernandez is in the process of launching a restaurant. Christine has never owned her own restaurant before, but she has worked for two of the best restaurants in town..
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  62) The biggest benefit of a public stock offering is ________. A) the capital infusion the company receives B) the ability to use its stock to acquire other companies C) a listing on a stock exchange D) the ability to use its stock to attract and retain key managers and employees 63) Investment bankers who.
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  11) Why is cash a unique asset? What are the advantages of efficient cash management? 12) More companies fail for the lack of ________ than for the lack of ________. A) cash; profit B) profit; cash C) net revenue; gross revenue D) vision; profit 13) Which of the following measures a company's liquidity and its ability.
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  84) For cash planning purposes, it is better to underestimate cash disbursements than to overestimate them. 85) Seasonal sales patterns cause cash balances to fluctuate dramatically, creating the need for cash forecasts. 86) To manage cash efficiently, business owners should strive to accelerate their accounts payable and stretch out their accounts receivable. 87).
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  67) Factors such as ________ should be sought out in the selection of retail and service business locations. A) the lowest possible rent/lease options, transportation network, adequate parking, physical and psychological barriers B) modest customer traffic, transportation network, lack of parking, physical and psychological barriers C) customer traffic, transportation network, adequate parking,.
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  72) In a Regulation D stock offering, the company ________. A) sells its shares directly to private investors B) makes a private placement without actually "going public" C) does not have to register its shares with the SEC D) All of the above 73) Most companies that make Rule 506 offerings raise between ________ and.
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  51) Venture capital companies reject 90 percent of the proposals they receive because they don't meet the firms' investment criteria. 52) Venture capital firms rarely take an active role in managing the business in which they invest. 53) Venture capital companies invest only in companies in the startup phase. 54) The most important.
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  11) On a company's statement of cash flows, depreciation is ________. A) the difference between the total sources available to the owner and the total uses of those assets B) listed as a source of funds because it is a noncash expense, already deducted as a cost of doing business C) the owner's.
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  Mini-Case 11-5: A Projected Income Statement You want to start your own retail furniture store, and you have already gathered a great deal of information on location, layout, form of ownership, business failure rates, etc. In applying for a loan, you notice that a projected income statement is required. Your problem.
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  21) Your friend Jake owns a business that is achieving phenomenal growth. Explain why it is said that: "Fast-growing companies are most likely to experience cash shortages." 22) The profits your small business is generating are high; however, you never seem to have enough cash to pay your bills on time..
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  58) Angels fill an important role in equity financing of a small business. Discuss their role, their typical profile, and how to find an angel. 59) Venture capital companies are an important source of equity funding for small businesses. Discuss their policies, ownership control, and investment preferences regarding funding small businesses. 60).
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  41) Unlike venture capital firms and most other institutional investors, angels typically invest in businesses in their earliest phases, providing the seed capital needed to get the business going. 42) If an entrepreneur needs a relatively small amount of money to launch a company, angels are a primary source of funds. 43).
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  112) Which of the following inventory management techniques would help a business owner make the best use of his company's cash? A) Avoid overbuying inventory. B) Schedule inventory deliveries at the latest possible date. C) Purchase goods from the fastest suppliers who can meet quality standards to keep inventory levels low. D) All of.
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    1) Entrepreneurs needing between $100,000 and $3 million in the current financial environment will likely find acquiring financing to be ________. A) challenging B) confusing C) attainable D) easy 2) Unlike entrepreneurs of the past, today's entrepreneurs ________. A) are finding more government interest and funding for business start-ups than in the past decade B) find fewer.
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  Mini-Case 12-1: The Golden Company This is a summary of the monthly cash budget for the next quarter (October through December) for the Golden Company. OctoberNovemberDecember Sales$750,000$800,000$900,000 Manufacturing Costs450,000480,000540,000 Operating Expenses225,000240,000270,000 Capital Expenditures- 0 -60,000- 0 — 110) From the information provided, prepare a monthly cash budget for the next quarter (October-December) for the Golden Company.     .
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  85) The central business district (CBD) ________. A) is the traditional center of town B) in many cities experienced decay in years past as customers began shopping more frequently at malls and shopping centers, but are now going through revitalization programs C) attracts customers from the entire trading area of the city D) All.
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  94) Small business owners should not press customers for payment of their past due accounts for fear of losing them as customers altogether. 95) A small business owner should concentrate collection efforts on the top 20 percent of the company's customers since they typically account for 80 percent of all accounts.
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  74) An entrepreneur can potentially improve collections by ________. A) contacting the customer once the bill becomes past due to verify they have received the bill and that it is accurate B) negotiate payment if the customer is unable to pay the full amount on time C) developing a rapport with the.
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