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Business 165 Brazie Fall 2008 Name___________________________________ MULTIPLE CHOICE.

Choose the one alternative that best completes the statement or answers the question. 1)

The ________ represe nts a “snapsh ot” of a business , showing an estimat e of its value on a given date, while the ________ is a “moving picture” of the firm’s profitabi lity over time.

1)

_______ A)

balance B)

sheet; income statement

balance C)

sheet; statement of cash flows

statement of cash flows; income statement D)

income 2)

statement; balance sheet

________ are those items of value the business owns; ________ are those things the business owes.

2)

_____ __

Liabilities; assets

B) Eq uiti

iabilities

Assets; liabilities

D) Ra tios 3)

Which of the followin g items would not be listed as a current asset in a compan y’s financial reports?

3)

_____ __

Fixtures

B) Ac cou

eceivable

Inventory

D) Ca sh 4)

The stateme nt of cash flows:

4)

_____ __

sd h w o h w at scl ai w m h s a cr te di a to srs sa e n td so w tn h er e s h b a u v se ia n g e ai sn sst th o o w s n e sa ss a et n s.

is the basic b accounting uil equation: Assets t = Liabilities + on Capital.

compares D)

costs and expenses against firm’s net profits.

shows 5)

changes in working capital by listing sources and uses of funds.

Creating projecte d (pro forma) financial stateme nts would allow a business owner to answer which of the followin g question s?

5)

_____ __

W b h u a si tn e p ss re o x fp ie tct to c a a c n hi e m v y e ?

W d variable ha expenses can my t business expect to fix incur at our ed targeted sales an level?

What sales D)

level must my business reach if our targeted profit is X dollars?

All of the 6)

above

A business should provide the owner with a reasona ble rate of return based upon:

6)

_____ __

trr h o e w e c d a fr p o im tth a e lb a b n o k.

in dustry averages.

an D)

acceptable annual salary.

the time and money invested in the business. 7)

________ ratios tell whether or not the small compan y will be able to meet its shortterm obligatio ns.

7)

_____ __

Profitability

B)D) Le ver D) Operating

Liquidity Refer to the following information to answer questions regarding Anita Lupino’s toy and game shop: Anita Lupino is planning to open her own toy and game shop. She has conducted a great deal of research at the local library, contacted the industry trade association, and has set up a meeting with a consultant at the SBDC next week. Before she goes to the SBDC, she wants to sketch out an estimated income statement. She reviews the following data from RMA’s Annual Statement Studies: Costs of goods sold 57.3 percent of net sales Operating expenses 32.9 percent of net sales Gross profit 42.7 percent of net sales 8)

If Anita’s researc h suggest s that she can expect net sales of $475,00 0, what net profit could she expect?

8)

_____ __

$202,825

B)

$46,550

C)

$156,275

D) $63 9 9 )

________ ratios measur e the extent to which an entrepre neur relies on debt capital rather than equity capital to finance a business .

9)

_____ __

Leverage

B) Liq uidi

Profitability

D) Op era 0)

________ ratios help a business owner evaluate the compan y’s perform ance and indicate how effectiv ely the business employs its resourc es.

10)

_____ _

Profitability

B) Op era

Liquidity

D) Le ver 1)

You are 7.7% 13.2% provide d this What can you reasonably assess about the current financial informat status of this company? ion about a retail store called “BoardS ports:” BoardS ports Industr y Mean Current Ratio 1.5 : 1 2: 1 Quick ratio .75 : 1 1:1 Debt ratio 0.87 : 1 0.75 : 1 Average collectio n ratio 46 days 33 days Net profit on sales ratio 5.5% 8.2% Net profit to equity ratio

11)

_____ _

T ect h abl e e fin can o cia m l p co a ndi n tio yn wit ih sno ch i an n ge s rre e qui sre p d.

Th pany is in poor e financial condition co with significant m changes required.

The company is in excellent financial condition with no changes required. D)

The company is in questionable financial condition with minor changes required. 12)

The breakev en point:

12)

_____ _

o an cy’s ctot u al rre sve nu w e h eq e ual rs e its tot a al ex cpe o ns m es. p

te lls a b us

iness owner the minimum level of activity needed to keep her company in operation.

is the point D)

at which a company neither earns a profit nor incurs a loss.

All of the

above

Regarding Gunther’s Emporium, refer to the following to answer the questions below : Gunther’s Emporium expects net sales of $2,396,919 for the upcoming year, with variable expenses totaling $1,813,443 and fixed expenses of $412,190. 13)

Gunther ’s Emporiu m expects net sales of $2,396, 919 for the upcomin g year, with variable expense s totaling $1,813, 443 and fixed expense s of $412,19 0. What is Gunther ’s breakev en point?

13)

_____ _

$ 93 1 ,2 , 76 6

$ 1,876,324

$5,667,009 D)

Insufficient 14)

information given to determine

Which of the followin g stateme nts concerni ng cash manage ment is false?

14)

_____ _

Y be o “c u as n h g sp on cge o s,” m so p aki a ng n up i ev e er sy av tail e abl n e d dol lar tof o ca sh.

C ent involves as forecasting, h collecting, m disbursing, an investing, and ag planning for a e company’s cash m needs.

Fast-growing businesses are least likely to experience shortages. D)

Cash is the 15)

most important yet least productive asset a small business owns.

The first step in managi ng cash more effectiv ely is:

15)

_____ _

h ca a sh vres i er n ve g for e a m n er ge a nc d y e ex q pe u ndi a tur tes. e

u rstanding the n company’s cash de flow cycle.

speeding up payment of accounts receivable. D)

rapid 16)

payment of accounts payable.

________ typically lead(s) sales; ________ typically lag(s) sales.

16)

_____ _

Purchases; collections

B) Pr od

eceivables

Collections; purchases

D) Re cei 7)

roduction

Jane is arguing with Joan about how much cash their small retail outlet needs as they prepare their cash budget. Jane feels that with the Christm as season coming, their busiest time, they need more cash availabl e while Joan feels they do not because their sales volume will be up significa ntly. Jane and Joan are discussi ng which step of the cash budgeti ng process ?

17)

_____ _

Dad e eq tua e te rmi m ni im n u im n ca g sh bal a an n ce

Fo casting cash re disbursements

Forecasting sales D)

Forecasting 18)

cash receipts

A cash budget is only as accurat e as the ________ forecast from which it is derived.

18)

_____ _

income

B) sal es

receivables

D) pr ofit

When a firm sells goods or services on credit, the owner needs to rememb er that for cash budgeti ng purpose s:

19)

_____ _

sion u co cun h ts as a a ca tsh rdis a bu n rse sm a en ct. t

th e sa le

may be immediately posted as if it has been collected.

she must D)

account for a delay between the sale and the actual collection of the proceeds.

the sale 20)

should be recorded in the month it was made.

The “big three” of cash manage ment include:

20)

_____ _

a iva cble c, o ov u er n he tad, san d rinv e en ctor e y.

ac nts receivable, co accounts payable, u and inventory.

accounts D)

payable, accounts receivable, and taxes.

accounts 21)

receivable, prices, and expenses.

When a small business is writing off more than ________ of its sales as bad debts, it needs to tighten its credit and collectio n policies.

21)

_____ _

5 percent

B) 25 per

10 percent

D) 3

per 2)

A small business owner could accelera te account s receivab le by:

22)

_____ _

sir l ow o n w ac i co n un g ts pa tya h ble e .

de g customer checks po and credit card sit receipts weekly. in

having D)

customers mail printed orders to him.

emailing or 23)

faxing invoices the day of shipment.

Patel Industri es recently filled an order from one of its custome rs, Oxmoor Gardens , a small garden supply store. Oxmoor’ s owner recently received an invoice from Patel for $1,278. 64 with selling terms of “2/10, net 30.” Therefor e:

23)

_____ _

tpe h rce e nt dis sco e un l t if l th ie n bill g is pai td e wit rhin m 10 sda ys; a ot rhe e rwi se o th fe f full e a rmo i un n t g of th O e xinv m oic o e o is rdu e a in 30 2 da ys.

th e se lli n g te

rms indicate that Oxmoor must pay 2 percent of the invoice by the 10th day of the month with the balance due in 30 days.

the selling terms

D)

indicate that Oxmoor has not yet qualified for a quantity discount and must pay the full amount of the invoice within 30 days.

the selling terms 24)

indicate that the full amount of the invoice is due within 30 days and Oxmoor will be subject to a 2 percent finance charge for every 10 days that the bill is past due.

The real benefit of barter for the entrepre neur is that:

24)

_____ _

i rec tiab le i ite sm for cta o x n pu srp i os d es e rat rhe e r d th an a as inc d om e e. p

it sentially without is cost to the es business owner.

it saves the small business owner between $100,000 and $150,000 a year on the average. D)

it is “paid”

for at the wholesale cost of doing business, yet it is credited at the retail price.

25)

Entrepre neurs needing between $100,00 0 and $3 million in the current financial environ ment will likely find that acquirin g financin g to be:

25)

_____ _

easy.

B) ch alle

attainable.

D) co nfu 6)

________ capital is used to purchas ea compan y’s perman ent assets such as land, building s, and equipm ent.

26)

_____ _

Growth

B)

Fixed

C)

Stable

D) W i g o r 27)

Susan borrows money from a bank to build up her inventor y supply for the upcomin g season, her busiest of the year. At the end of the season, she repays the money she borrowe d. This entrepre neur was using ________ capital.

27)

_____ _

working

B)

robust

C)

growth

D) f i x 28)

The primary advanta ge of equity capital is:

28)

_____ _

tot h ha a ve tto be i re tpai d d lik o a e e loa sn do n es.

th does not appear at on a company’s it balance sheet.

its lower D)

interest rate.

that it is 29)

readily available to a large number of entrepreneurs from a variety of lenders.

The primary disadva ntage of equity capital is that the entrepre neur:

29)

_____ _

e ge xof p th e e rris i k/r e et n ur cn e tra sde off tin h th e e for d m i of shig a he d r vint a er n est trat a es.

m repay it at some us point with t interest.

must give up someperhaps mostof the ownership in the business to outsiders. D)

B and C 30)

above

The first place an entrepre neur should look for startup capital is:

30)

_____ _

a ba nk.

th Small Business e Administration.

a venture D)

capitalist.

his own 31)

savings.

The largest single source of external equity capital for small business es is:

31)

_____ _

tar h ke e t; i.e. s, t“g o oin cg kpu bli m c.”

an gels.

Small D)

Business Administration loans.

venture 32)

capitalists.

A/An ________ is a private, forprofit organiza tion that purchas es equity position s in young business es that will potentia lly produce returns of 300 to 500 percent over five to seven years.

32)

_____ _

angel

B) co m

ank

SB-1 filing

D) ve ntu

ompany

To the entrepre neur who founded the compan y, the biggest disadva ntage of making a public stock offering is the:

33)

_____ _

d ed i cor m po i rat n e i im sag h e.

re g to the Securities po and Exchange rti Commission. n

loss of key D)

employees to competitors.

dilution of 34)

her ownership interest and potential for loss of control.

In an initial public offering, the underwr iter, or investm ent banker, serves to:

34)

_____ _

d ce e of tth e e rsh m ar i es n iss e ue d tin h th e e off p eri rng i.

ad help prepare the vi company’s se registration an statement for the d SEC.

sell the D)

company’s stock through an underwriting syndicate of other investment bankers it develops.

All of the 35)

above

The goal of the SEC’s Regulati on S-B is:

35)

_____ _

tall o co m d pa i nie ss cfro o m u try ring a to g “g e o pu sbli m c.”

to m ak e

the standards for making a public stock offering more stringent.

to open the capital markets to smaller companies by cutting the paperwork and the costs normally doors to required to make a public offering. D)

to make it 36)

easier for the SEC to detect companies whose stock would be bad investments for consumers.

Because of the risk/retu rn tradeoff, small business es that borrow money repay it with interest at the:

36)

_____ _

p in rter i est m rat e e.

le der’s cost of n capital.

prime D)

interest rate plus a few percentage points.

prime 37)

interest rate minus a few percentage points.

Studies suggest that ________ banks are most likely to lend money to small business es.

37)

_____ _

very large national

B) s

ma

large regional

D) for eig 8)

A ________ is an agreem ent with a bank that allows a small business to borrow up to a predeter mined specifie d amount during the year without making an applicati on each time.

38)

_____ _

factor

B) ter m

line of credit

D) flo or 9)

________ is the process of influenci ng and inspiring others to work to achieve a common goal and then giving them the power and the freedom to achieve it.

39)

_____ _

Leadership

B) Or ga

Management

D) Co ord

One of the best sources for prospec ts for new position s may come from:

40)

_____ _

ct u e rm rplo e ye n es.

th e Internet.

employment advertisements. D)

colleges and universities. 41)

A ________ is the process by which a compan y determi nes the duties and the nature of the jobs to be filled and the skills and experie nce required of the people who are to fill them.

41)

_____ _

job specification

B) jo b

job description

D) m an 2)

udit

A ________ identifie s the duties and responsi bilities of a position and its working conditio ns, while a ________ identifie s the qualifica tions required of the job candidat e in terms of skills, educatio n, and experie nce needed.

42)

_____ _

j ific o ati b on; job sde p scr e ipti con

jo analysis; job b description

job analysis; job specification D)

job 43)

description; job specification

Effectiv e intervie wers spend about ________ percent of the intervie w talking and ________ percent listening .

43)

_____ _

90; 10

B)

75; 25

C)

50; 50

D) 255 ; 44)

Accordin g to the Society for Human Resourc e Manage ment, more than ________ of candidat es either exagger ated or falsified informat ion about their previous employ ment on their resumes .

44)

_____ _

two-thirds

B) on e-

half

D) thr ee5)

________ is the distincti ve, unwritte n code of conduct that governs the behavio r, attitude s, relations hips, and style of an organiza tion.

45)

_____ _

Hierarchy of command

B) Or ga

tructure

Company culture

D) Fo rm 6)

rganization

The ________ design strategy involves building motivat ors into a job by increasi ng the planning , decision making, organizi ng, and controlli ng function s workers perform.

46)

_____ _

job enrichment

B) jo b

job simplification

D) jo b 7)

In job enrichm ent, ________ is the degree to which a job allows a worker to complet ea whole or identifia ble piece of work.

47)

_____ _

skill variety

B) ta sk

autonomy

D) ta sk 8)

In job enrichm ent, ________ is the degree to which a job substant ially influenc es the lives or work of others employe es or final custome rs.

48)

_____ _

autonomy

B) ta sk

task identity

D) ski ll 9)

In job enrichm ent, ________ is the degree to which a job requires a variety of different skills, talents, and activitie s from the worker.

49)

_____ _

task identity

B) ta sk

skill variety

D) au ton 0)

The type of job design that breaks work down into its simplest form and standar dizes tasks is known as:

50)

_____ _

job enlargement.

B) ho rizo

oading.

job rotation.

D) jo b

From the video: Pike Place Fish 1). What is the difference between coaching and making wrong? ________________ ________________ ________________ ________________ __ ________________ ________________ ________________ ________________ __ ________________ ________________ ________________ ________________ __ 2.) What was their Wild Hairy Assed Goal? ________________ ________________ ________________ ________________ __ 3.) What type of management did the consultant mention as the type used by Pike Place Fish? ________________ ________________ ________________ ________________ __ 4.) According to Le Boeuf, what is the Greatest Management Principal?

_______ _______ _______ _______ _______ _______ _______ _______ _______ ___ 5. Accord ing to the hando ut Recog nition: Makin g Heroes , What is the differe nce betwe en pay and reward s? _______ _______ _______ _______ _______ _______ _______ _______ _______ ___ _______ _______ _______ _______ _______ _______ _______ _______ _______ ___ _______ _______ _______ _______ _______ _______

________________________ ___________________________________________________ _______________