WorksheetsEntrepreneurship Midterm Study
Total questions: 43
Worksheet time: 22mins
A breakeven analysis can determine:
how many units the company will need to sell to pay for a new piece of equipment
the identity of future loan guarantors
when a company must pay its bills to avoid bankruptcy
how many customers a new business will need to secure to meet its revenue projections
A business plan has the following purpose
serves as collateral that a company can take to a bank to secure guaranteed loans
serves as a required filing with the Internal Revenue Service
describes in detail how the company's product or service will be differentiated versus its competition
describes in detail how the company will set up its headquarters office
A company balance sheet is the single report that best indicates:
company quarterly cash flow
company assets and liabilities
company financial projections
monthly debt payments and outstanding debt obligations
A conflict of interest is:
when business partners have an honest disagreement about their next advertising campaign
when an accountant disagrees with the IRS on how much a company owes in income taxes
a situation in which an individual might take an action to his/her advantage that would be to the disadvantage of a person or company that believe this individual is serving them
naturally occurring whenever there is competition between small businesses
A guarantor:
must be a business or individual located in-state
assumes no legal responsibilities
has limited liquidity
is a credit-worthy individual or business responsible for repaying a loan if the debtholder cannot
A payment made to an insurance company to cover the costs of an insurance policy is called:
a policy
a premium
a dividend
a beneficiary
Advertising can be important for a new business because it:
communicates a differentiated message to your target customers
is a free form of promotion
allows the new business to set up a network of distributors
is a low-cost method to increase revenues
Amari has had a frustrating week. One of the new employees hired just last week showed up late her first two days, and another didn't even show up one of his scheduled days. Amari talked patiently with both of them in the hope that they could turn their situation around and become valuable team members. Unfortunately, at the same time the bank returned the credit application that took Amari hours to fill out with requests for additional information. Amari had to find the time to find that information and send the application back to the bank. Finally, Amari really wanted to watch the The Voice on television tonight, but decided to stay in the store until closing because the store is short-staffed. The type of entrepreneurial behavior that Amari has been exhibiting can best be described as:
comfort engaging with strangers
financial literacy
self-discipline
pessimism
An example of a fixed cost is:
cost of goods sold
hourly labor
office supplies
monthly rent
An example of a variable cost is:
overhead salaries
cost of goods sold
the salary of the Finance Vice President
monthly rent
An example of intellectual property is:
a truck
a patent on an invention
stock
electronic bank accounts
Bank loan applications:
can be intimidating, complex and detailed
are easy to complete
are short
can only be completed in the presence of a banker during regular work hours
Compared to a bank loan, an online loan is:
less expensive (lower interest rate)
much easier to obtain
only for companies in certain industries
approximately equal in terms of interest rates
Consuelo's gift store has an opportunity that will disappear if they don't move quickly. A competitor is moving to another state and they've offered to sell Consuelo their inventory at 25% of retail value. Consuelo has inspected the inventory, it's in perfect condition and includes all of the most popular items that Consuelo's store sells every day. In the upcoming holiday season 60 days away Consuelo is sure the store can sell pretty much all of this inventory. Unfortunately this offer is only open for 48 hours, after that, the competitor will sell to another buyer. What type of financing should Consuelo seek?
online credit
mortgage
bank credit
none, the numbers indicate this will not be a profitable business decision
Corporate social responsibility:
is the legal requirement that companies make charitable donations before paying dividends
is a government program required for all companies
are voluntary steps beyond a company's financial self-interest that reflect what business leaders believe their companies can or should accomplish
is a form that must be completed each year and filed with the Louisiana Secretary of State
Loan applications require:
applicants to offer a guarantee to take whatever
applicants to provide personal and business information that must be truthful
completion all in one sitting
applicants to pay for the right to submit an application
One critical difference between bank loans and online loans is:
applicants only have to be completely truthful on a bank loan application
none, they are pretty much the same
the amount of information the applicant must provide
the amount of money the applicant can request
Something of value
liability
asset
debt
equity
Equipment, inventory or other goods that are pledged to the bank in the case the company can not make a loan payment
mortgage
securities
share
collateral
Money earned when something is sold. It is usually stated as a percentage
commission
collateral
liquid asset
liability
A person or a business with a strong credit score and the financial resources that make it like they will be able to pay any loan.
collateral
dividend
credit-worthy
net income
Money paid by a company to a person who owns stock in that company.
liquid assets
assets q
dividend
mortgage
An obligation you have to pay someone else money.
asset
commissions
lien
liability
The right to take possession of collateral until a debt is repaid.
collateral
lien
mortgage
notes payable
Cash or securities that can be immediately turned into cash, which can then repay any loan amount outstanding.
mortgage
commissions
assets
liquid assets
The money a person borrows to buy real estate.
mortgage
lien
notes payable
maturity
The date a loan (or debt or liability) is repaid in full.
securities
lien
credit-worthy
maturity
Revenues after cost
notes payable
assets
net income
maturity
Revenues after cost
notes payable
assets
net income
maturity
Other types of debt that you owe someone other than a mortgage
notes payable
liquid assets
lien
securities
An investment worth money; a financial instrument indicating ownership.
lien
mortgage
share
securities
One of the equal parts into which a company's capital is divided, entitling the holder to a proportion of the profits.
securities
share
assets
liability
An individual or company that owns shares in a company
lien holder
brokerage
angel investors
shareholder
Assets that are not already pledged as a guarantee to repay another loan
unencumbered
lien
shares
securities
Parker needs money to expand the warehouse. By expanding the warehouse the company will be able to carry a lot more inventory, which will make it possible for them to fill more customer orders much more quickly. This expansion will cost approximately $150,000 in construction costs. Purchasing the additional inventory will cost $50,000. Over the next two years Parker believes this will increase sales 20% and profitability 25%. What type of financing should Parker seek?
online credit
credit card credit
bank credit
none, the numbers indicate this will not be a profitable outcome
The financial term liability refers to:
a weakness in the company's financial structure
the ability of the company to raise funds
the ability of the company to secure loans
a debt or a loan a company must repay
The fixed costs of a business:
must be different each month
include the cost of production materials
are the same no matter how many customers the business services
must exceed variable costs
The maturity of a loan is:
how long it takes to receive loan approval from the bank
the timeframe by which the borrower must repay the loan
the interest rate on the loan
the balance of an outstanding loan
The profit margin on an item a company sells can best be defined as:
price of the unit minus unit cost of goods sold
total debt minus annual debt payment
variable cost per unit
total company revenue minus total company costs
Total revenues minus total costs equals:
contribution margin
unit breakeven
profits before owner compensation and taxes
future value profits
Which factors reduce the cost of borrowing from a bank?
a guarantor
an outstanding mortgage
other outstanding loans
available phantom assets
Which is an entrepreneur?
a parking lot attendant
a corporate vice president of human relations
a state government official
a woman who designs and makes her own line of clothing and sells them to her friends
Which is an entrepreneur?
the bank CEO who started out as a teller 30 years ago
the convenience store clerk
an adult who started cutting grass as a pre-teen and now runs a gardening business with a sibling
a manager of the biggest chain grocery store in the state
