Deck 12: Entrepreneurial Finance

Question 1

Earnings before interest and taxes (EBIT)
Less Tax exposure (tax rate times EBIT)
Plus Depreciation,amortization,and other noncash charges
Less Increase in operating working capital
Less Capital expenditures.
This formula is used to calculate ____.

Answer 1

cash flow

Question 2

Strategies that optimize or maximize the amount of money to be raised decrease risk in new and emerging companies.

Answer 2

False

Question 3

An existing and expanding business will find it harder to raise equity capital from private or institutional sources.

Answer 3

False

Question 4

The date a company runs out of money is called ____.

Question 5

Short-term debt is most often used by a business for working capital and is repaid out of the proceeds of its sales.

Question 6

Increasing sales and healthy profitability ____.

A) lead to positive cash flow
B) lead to negative cash flow
C) lead to zero cash flow
D) have no effect on the cash flow

Question 7

Mezzanine or bridge capital is available at the _____ stage of development.

A) R&D
B) startup
C) early growth
D) exit

Question 8

Lack of financial know-how and unanticipated issues are often the entrepreneurs' Achilles' heels.

Question 9

All underlying characteristics and assumptions used by popular financial theories and models do not hold up for startups,even up to an IPO.

Question 10

An entrepreneur's bargaining power with various sources of equity and debt capital is influenced by the cash flow of the venture.

Question 11

Short-term debt is incurred for what time frame?

A) Less than six months
B) One year or less
C) One to five years
D) Depends on the deal structure

Question 12

A new or existing business needs to obtain both equity and debt financing if it is to have a sound financial foundation.

Question 13

New and emerging companies are gluttons for capital,yet are usually not very debt worthy.

Question 14

An existing business seeking expansion capital or funds for temporary use has a much easier job obtaining both debt and equity.

Question 15

Long-term borrowings are used for working capital or to finance the purchase of property or equipment.

Question 16

The core concept in determining the external financing requirements of a venture is ____.

Question 17

According to the principles of entrepreneurial finance,cash sooner is preferred to cash later.

Question 18

A fund-raising strategy commits a company to actions that may have an impact on future financing options.

Question 19

Which critical issue faced by entrepreneurs is concerned with the constituencies for whom value must be created or added to achieve a positive cash flow?

A) Slicing the value pie
B) Covering risk
C) Creating value
D) Ignoring the value pie

Question 20

Banks are typically willing to provide long-term debt to new ventures if the business has a substantial asset base of property and equipment.

Question 21

_____ is used to fill the nonbankable cash gaps where money cannot be borrowed,preserve ownership,and lower the risk of loan defaults.

Question 22

What are the three core principles of entrepreneurial finance?

Question 23

Discuss the premise behind fund-raising strategies of a successful entrepreneur.

Question 24

List the factors that can affect the availability of various financing options and their suitability and cost.

Question 25

How is the increase in net total operating capital calculated?

Question 26

What phenomenon is at the heart of the financing challenges faced by new and high revenue growth companies?

Question 27

_____ is the art and science of quantifying value creation,slicing the value pie,and managing and covering financial risk.

Question 28

What are the three vital corollaries determining the external financing requirement of a venture?

Question 29

_____ borrowings are used to finance the purchase of property or equipment that serves as collateral for a loan.

Question 30

What funding structure provides a sound financial foundation for growth without excessive dilution of an entrepreneur's equity?

Question 31

What are the three central issues in entrepreneurial finance?

Question 32

Short-term debt is incurred for _____ months or less.

Question 33

Transactions cash balances
Plus Accounts receivable
Plus Inventory
Plus Other operating current assets (e.g. ,prepaid expenses)
Less Accounts payable
Less Taxes payable
Less Other operating current liabilities (e.g. ,accrued expenses)
This formula is used to calculate ____.