ESB Semester Exam 2 Study Guide

A good bank debt ratio is typically

• 70% or more

• 60%

• 40% or less

• 50%

Entrepreneurs can turn to which of the following for equity financing?

• Banks

• Venture capitalists

• Credit unions

• All of the above

Financing a business by selling shares of ownership in the business is called

• Debt financing

• Equity financing

• Green financing

• All of the above

Borrowing money to start a new business is called

• Debt financing

• Green financing

• Equity financing

• All of the above

An emergency fund is the amount of cash reserve that a business should keep during its

• First month of operation

• First year of operation

• First three months of operation

• First month to two months of operation

If you pay yourself monthly a salary to run your business, that salary is entered on the income statement as

• Net profit

• Variable expense

• Fixed expense

• Pre-tax profit

On an income statement, gross profit is calculated by

• adding the cost of goods sold to the pre-tax profit

• adding the cost of goods sold to the total revenue

• subtracting the cost of goods sold from the operating expenses

• subtracting the cost of goods sold from the net sales

An income statement is also called a

• Balance sheet

• Sales forecast

• Profit and loss statement

• Cash flow statement

The sales forecasting technique in which you predict selling as many products as you can is called

• Target selling

• Market share

• Full capacity

• Order projecting

A company has a break-even point of 1,000 units, and sold 750 units. Did the company cover its expenses?

• No, it needs to sell 250 more units to cover expenses

• Yes, because the sales equal $1,000

• No, it sold 75% of the amount required to cover expenses

• No, it needs to sell 500 more units to cover expenses