ESB Module 5 Exam Review

Which statement best explains why businesses continuously monitor and adjust the operating budget?

• To make informed decisions based on actual financial performance

• To avoid paying any taxes

• To eliminate all fixed costs

• To guarantee sales growth every month

Which formula determines the selling price when a business wants a specific profit margin?

• Cost + Desired Profit Margin

• (Cost × Desired Profit Margin) + Cost

• Revenue − Cost

• Cost ÷ Desired Profit Margin

When considering a Small Business Administration (SBA) loan, which factor is most important to include in financial planning?

• Repayment terms and interest cost

• Only the loan amount requested

• Marketing slogans

• Employee scheduling

What does an income statement help a business identify so it can shape future strategies?

• Areas of strength or concern in financial performance

• Exact cash on hand at a moment in time

• All customer birthdays

• Only fixed asset values

In the context of ROI, how is Net Profit most directly calculated for an investment discussed here?

• Net Cash from Operating Activities related to the investment

• Total equity minus total liabilities

• Sales minus taxes only

• Cash from financing activities

A positive owner's equity indicates which of the following?

• Assets exceed liabilities, suggesting financial health

• Liabilities exceed assets, indicating risk

• Sales exceed expenses this month

• Cash flow from financing is negative

Which action is key when preparing for an SBA loan application?

• Research programs, understand terms, and prepare a comprehensive application

• Focus only on product design

• Ignore credit history

• Submit without any documentation

Which requirement is typical for attracting an angel investor for a bakery?

• Create a compelling pitch with business model, growth potential, and projections

• Offer no ownership stake

• Avoid discussing risks

• Provide only recipes

In a business context, efficiency mainly involves:

• Maximizing profits with minimum use of assets

• Hiring as many employees as possible

• Keeping prices as low as possible regardless of cost

• Delaying supplier payments

A basic eligibility requirement for an SBA grant typically involves:

• Meeting specific criteria outlined by the grant program

• Repaying the grant with interest

• Providing collateral equal to the grant

• Hiring a minimum number of employees