Deck 13: Entrepreneurial Finance

Question 1

An entrepreneur's bargaining power is directly related to the cash position of the venture.

Answer 1

True

Question 2

Which of the following is a likely source for funding a venture that is preparing for a harvest?

A) Strategic alliances
B) Mezzanine capital
C) Corporate partnerships
D) MESBICs

Answer 2

A

Question 3

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

Answer 3

cash flow

Question 4

In the financial strategy framework,financial requirements are driven by all of the following except:

A) Burn rate
B) Operating needs
C) Time to close
D) Asset requirements

Question 5

Short-term debt is incurred within what time frame?

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

Question 6

What leads and drives the financial strategy framework?

A) Financial requirements
B) Opportunity
C) Sources and deal structures
D) Financial strategy

Question 7

In the financial strategy framework,degrees of financial freedom include all of the following except:

A) Time to Out of Cash
B) Future alternatives
C) Risk/Reward
D) Burn rate

Question 8

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

Question 9

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

Question 10

Long-term loans are debt instruments that mature in as few as three years.

Question 11

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

Question 12

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

Question 13

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

Question 14

For lending purposes,commercial banks generally regard subordinated debt as what?

A) Equity
B) Debt
C) Collateral
D) Depends on the deal structure

Question 15

What is the most likely source for early stage equity capital under $250,000?

A) Informal investors
B) SBICs
C) Corporations
D) Private placements

Question 16

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

Question 17

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 18

Mezzanine and bridge capital is available at what venture stage of development?

A) R&D
B) Startup
C) Early Growth
D) Exit

Question 19

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

Question 20

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

Question 21

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

Question 22

Short-term debt is incurred in ________ months or less.

Question 23

How is the increase in net total operating capital calculated?

Question 24

What are the three core principles of entrepreneurial finance?

Question 25

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

Question 26

What are the three central issues in entrepreneurial finance?

Question 27

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

Question 28

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 ________.

Question 29

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

Question 30

Long-term borrowings mature in more than _________.

Question 31

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

Question 32

Venture capital investors normally ________ their business loans to the loans provided by the bank or other financial institutions.