eMM4-Topic 11&12

What does the term "working capital" refer to in financial forecasting?

• Long-term assets of the business
• Funds available for day-to-day operations
• Revenue from sales
• Investments in stocks

What financial document is typically used as a basis for forecasting financial requirements?

• Balance sheet
• Cash flow statement
• Income statement
• All of the above

What is the primary purpose of financial forecasting for small businesses?

• To calculate the business owner's salary
• To estimate future financial needs and plan accordingly
• To avoid paying taxes
• To determine the current cash balance

Which of the following is a key component of financial forecasting?

• Analyzing competitors' market share
• Predicting future sales and expenses
• Determining employee satisfaction
• Evaluating customer preferences

Which of the following is NOT a typical source of financing for small businesses?

• Personal savings
• Venture capital
• Crowdfunding
• National defense grants

A small business owner uses financial forecasting to determine that they will need $50,000 to expand operations. Which financing option is most suitable if they want to retain full ownership?

• Bank loan
• Angel investment
• Venture capital
• Equity crowdfunding

How can financial forecasting help in choosing the right financing option for a small business?

• By predicting potential repayment challenges
• By eliminating all financial risks
• By reducing the need for a business plan
• By guaranteeing profitability

If a small business forecasts that its revenue will grow by 10% annually, which financial statement will show this growth?

• Balance sheet
• Income statement
• Cash flow statement
• Statement of retained earnings

What is one key difference between equity financing and debt financing for small businesses?

• Debt financing involves giving up ownership, while equity financing does not.
• Debt financing requires repayment with interest, while equity financing does not.
• Debt financing is only available to large corporations, while equity financing is for small businesses.
• Both are forms of grant funding.

Why is it important to consider the interest rate when planning for small business financing?

• It affects the cost of borrowing and repayment amount
• It determines the sales price of the product
• It is required for tax purposes
• It is irrelevant for small businesses