Deck 1: Introduction to Canadian Hospitality Financial Management and Fundamental Principles of Financial Management

Question 1

Startup capital can include venture capital.

Answer 1

True

Question 2

Working capital is equal to Current Assets less Current Liabilities.
tructure represents the ideal mix of IGF, debt, and equity financing.

Answer 2

True

Question 3

Internally Generated Funds are a result of profitable operations.

Answer 3

True

Question 4

A tax shield is the product of prudent financial management such as the strategic application of legal depreciation methods.

Question 5

Corporations reward shareholders in the form of dividends.

Question 6

Equity financing can take place by securing "Angel" investors.

Question 7

An equity kicker is an arrangement in which an individual agrees to provided services to a hospitality enterprise in exchange for little or no pay but a significant portion of the company's shares.

Question 8

Debt financing can include both loans and bonds.

Question 9

Under most circumstances a hospitality operation cannot secure debt financing unless there is already some equity in place.

Question 10

The optimal capital s

Question 11

Given the following information what is the Working Capital (WC) value for Niagara Hotels Ltd?
Current Assets:= $480,000
Current Liabilities:= $360,000

A) WC:= $500,000
B) WC:= $840,000
C) WC:= $120,000
D) There is not enough information provided.

Question 12

IGF can be increased by:

A) An improvement/increase in profitable operations.
B) Paying higher wages to employees.
C) Providing more sales discounts to customers thus reducing gross revenue values.
D) Paying out more dividends to reward shareholders.

Question 13

Angel investors are typically:

A) affluent, commerce-minded individuals who see potential and promise in the proposed hospitality enterprise.
B) Banks and Investment Firms.
C) Pension Funds
D) Insurance Companies

Question 14

An "Equity Kicker" can work well for a hospitality startup when:

A) There is little or no working capital available.
B) There is little or no debt.
C) There is little or no shareholders.
D) There is little or no IGF.

Question 15

Bonds and loans are types of:

A) IGF.
B) Equity financing.
C) Debt financing.
D) All of the above.

Question 16

The most common form of business organization in Canada is the sole proprietorship.

Question 17

Which of the following is a disadvantage with a cooperative?

A) Possible conflict between members.
B) Shorter decision making process.
C) Participation of members not required for success.
D) Little record keeping is common with a cooperative.

Question 18

"Risk" should be thought of as:

A) the potential for outcomes to be different from our expectations.
B) a negative outcome.
C) unnecessary action taken by management.
D) bad investments that will ultimately cause a loss of wealth.