Question 1

The amount of cash a company uses during a certain period of time, usually in months is referred to as ______________.&#10;A) Cash flow.&#10;B) Burn rate.&#10;C) Cash disbursement.&#10;D) Equity.

Accepted Answer

The term "burn rate" refers to the amount of cash a company uses or spends during a certain period of time, usually in months. This is often used to measure a startup's financial health and how long it can continue operating before running out of funds. Choices A, C, and D are not the correct terms for this definition.

Question 2

______ are not donations. Rather, they are investments intended to generate attractive returns on investment while at the same time using market-based solutions to address social issues.&#10;A) Crowdfunding.&#10;B) Social venture capital investments.&#10;C) Bootstrapping.&#10;D) Crowdsourcing.

Accepted Answer

Social venture capital investments are investments made with the intention of generating attractive returns on investment while addressing social issues through market-based solutions. Crowdfunding, bootstrapping, and crowdsourcing are funding methods that do not necessarily involve returns on investment or market-based solutions.

Question 3

In which of the following funding mechanisms are the loans provided to borrowers generally small in nature but can prove beneficial if the social venture does not require much seed money?&#10;A) Microlending.&#10;B) Bootstrapping.&#10;C) Financial analysis.&#10;D) Bank loans.

Accepted Answer

Microlending is a funding mechanism in which small loans are provided to borrowers, usually for micro-businesses or social enterprises. These loans are generally small in nature but can prove beneficial if the social venture does not require much seed money. Bootstrapping involves self-funding or using personal savings to start a business. Financial analysis refers to the process of evaluating an organization's financial health and making recommendations for improvement. Bank loans are traditional loans provided by banks, but they may not be suitable for small social ventures that need small amounts of capital.

Question 4

_______ refers to the supply of capital to charities, social ventures, and businesses with social missions and an approach to managing capital that yields social dividends as well as economic returns.&#10;A) Social marketing.&#10;B) Social finance.&#10;C) Cause-related marketing.&#10;D) Financial vulnerability.

Accepted Answer

Social finance refers to the supply of capital to organizations and businesses that have social missions and yield social dividends along with financial returns. This can include social ventures and charities, as well as businesses that prioritize social and environmental impact. Social finance often involves innovative financing models, such as impact investing or social impact bonds, and aims to address social and environmental issues while also generating sustainable financial returns.

Question 5

When a social venture receives most of its revenue from a large variety of sources, its financial vulnerability is likely to be _______.&#10;A) Low.&#10;B) High.&#10;C) Stable.&#10;D) Equal.

Accepted Answer

When a social venture receives most of its revenue from a large variety of sources, its financial vulnerability is likely to be low as it is less dependent on any one source of income. This makes the venture less susceptible to financial challenges that could arise if one source of income were to decrease or disappear altogether.

Question 6

When a social venture receives most of its revenue from relatively few sources, its financial vulnerability is likely to be _______.&#10;A) Low.&#10;B) High.&#10;C) Stable.&#10;D) Equal.

Accepted Answer

When a social venture receives most of its revenue from relatively few sources, its financial vulnerability is likely to be high. This is because if one or more of those sources stops funding, the social venture may struggle to maintain its operations.

Question 7

Which of the following indexes is used to measure the financial vulnerability of a social venture?&#10;A) Gross profit margin.&#10;B) Gross surplus margin.&#10;C) Financial viability index.&#10;D) Debt ratio.

Accepted Answer

The financial viability index is specifically used to measure the financial vulnerability of a social venture. The other options (gross profit margin, gross surplus margin, and debt ratio) are not necessarily tailored towards measuring financial vulnerability in the context of a social venture.

Question 8

Because John has limited financial resources to launch his social venture, he is trying to find ways to avoid the need for external funding. As a result, he engages in cost-cutting measures by relying on used equipment and technology and whatever he can do to reduce costs. John is probably using ______.

A) Crowdfunding.
B) Fundraising.
C) Bootstrapping.
D) Crowdsourcing.

Accepted Answer

John is using bootstrapping, which means relying on personal savings, revenue generated by the venture, and cost-cutting measures to get the venture off the ground without external funding. Crowdfunding, fundraising, and crowdsourcing all involve seeking external funding or resources.

Question 9

To raise capital for her new social venture, Martha has launched a campaign that uses an Internet-based platform. This campaign allows participants to contribute to her social venture by donating small amounts of money. Martha is probably relying on ____________.

A) Crowdfunding.
B) Fundraising.
C) Capital budgeting.
D) Crowdsourcing.

Accepted Answer

The scenario describes crowdfunding, which is the process of raising small amounts of money from a large group of people through an Internet-based platform. Fundraising typically refers to the process of soliciting donations from a smaller group of individuals or organizations, while capital budgeting refers to the process of planning and managing investments in long-term assets. Crowdsourcing involves using a large group of people to perform a task or solve a problem, which is not applicable to Martha's fundraising campaign.

Question 10

Which of the following types of investment comprises the total time and effort that a founder invests in a new venture?&#10;A) Equity crowdfunding.&#10;B) Social venture capital investments.&#10;C) Sweat equity.&#10;D) Crowdsourcing.

Accepted Answer

Sweat equity refers to the contribution made by a founder in the form of time, effort, and skills towards building a new venture. This is different from other types of investments like equity crowdfunding, social venture capital investments or crowdsourcing, which involve financial investments from external parties.

Deck 10: Managing the Financial Side of Social Ventures