Deck 12: Financial Performance for Entrepreneurial Ventures

Question 1

The term 'fixed assets' can be defined as:

A)Fixtures and furniture that are not removable from a building
B)Employees expected to remain with a firm for an extended period of time
C)Land,building,equipment and other assets expected to remain with a firm for an extended period of time
D)Only land expected to remain with a firm for an extended period of time

Answer 1

C

Question 2

An income statement is also called a:

A)Profit and loss or P&L
B)Gross profit statement
C)Annual income statement
D)All of these choices

Answer 2

A

Question 3

What or who is a stakeholder?

A)A group that affects or can be affected by the organisation and its actions
B)An organisation that affects or can be affected by the organisation and its actions
C)A person that affects or can be affected by the organisation and its actions
D)All of these choices

Answer 3

D

Question 4

A net profit can sometimes be referred to as:

A)the triple bottom line
B)the cost of goods line
C)the bottom line
D)the gross profit lines

Question 5

The formula for the 'quick' financial ratio to measure liquidity is:

A)Cash plus accounts receivable divided by current liabilities
B)Cash divided by current liabilities
C)Current assets divided by current liabilities
D)Sales divided by total assets

Question 6

What does inventory turnover measure?

A)How many days inventory has been available
B)The rate at which suppliers pay for inventory
C)The rate at which the inventory is being used on an annual basis
D)All of these choices

Question 7

For the entrepreneur,what is 'capital'?

A)The amount invested in the business by the shareholders
B)The money invested or available for investment
C)The amount invested in the business by the proprietors
D)All of these choices

Question 8

The formula for gross profit is:

A)Cost of goods sold minus revenue = gross profit
B)Net profit + cost of goods sold = gross profit
C)Revenue minus cost of goods sold = gross profit
D)Net profit + insurance = gross profit

Question 9

The formula for owners' equity is:

A)assets minus liabilities
B)liabilities minus assets
C)cash on hand plus assets minus liabilities
D)cash on hand minus assets

Question 10

The term 'current assets' includes:

A)cash and accounts receivable
B)allowances for uncollectible accounts
C)business inventory and prepaid expenses
D)All of these choices

Question 11

What is a break-even analysis?

A)The method of determining the point at which a company makes neither a profit or a loss
B)A method of determining the point at which company has made its gross profit margin
C)The method of determining the point at which a company makes its desired net profit
D)None of these choices

Question 12

If an entrepreneur is doing regression analysis,they draw conclusions about:

A)how many steps backward the organisation is going
B)when the next recession is coming
C)the relationship between sales and expenditures
D)All of these choices

Question 13

Is a bank loan considered to be a long-term liability?

A)No,a bank loan is just a liability
B)Yes,a bank loan is considered to be a long-term liability
C)It depends on the interest-free length of the loan
D)All of these choices

Question 14

The balance sheet is:

A)an itemised statement listing total assets,liabilities and net worth of your business at a given moment
B)an itemised statement listing the profit and loss of your business at a given time
C)an itemised statement listing gross and net profits for your business at any given moment
D)an itemised statement listing interest for your business at any given moment

Question 15

Financial information:

A)quantifies all the assumptions and historical information concerning business operations
B)pulls together all the marketing,distribution,manufacturing and management sections of the business
C)is used to measure financial performance
D)All of these choices

Question 16

Which of the following are true about the net present value method?

A)It is a method used in decision-making that measures the equivalent value of a stream of payments over time
B)The NPV represents the amount that would need to be invested at a commercial interest rate at the beginning of the period of payments in order to meet all the payments as they fall due
C)The NPV is a technique to overcome some of the shortcomings of the payback method by recognising future cash flows beyond the payback period
D)All of these choices

Question 17

Which of the following are true about the internal rate of return method?

A)The internal rate of return method measures future cash flows that are discounted at a rate that makes the net present value of the project equal or zero
B)The internal rate of return represents the interest yield promised by a project over its useful life
C)The internal rate of return is similar to the net present value method when future cash flows are discounted
D)All of these choices

Question 18

Most income statements cover:

A)a ten-year interval
B)a one-year interval
C)the entire life cycle of the business
D)a one-day interval

Question 19

Which of the following do small business owners or entrepreneurs need to be able to forecast and budget for?

A)Monthly and annual budgets,operating budgets,cash flow budget,capital budget,sales forecast and linear regression
B)Salary amounts only
C)There is no need for small business owners to write these budgets,as it is the accountants' responsibility
D)Daily operating budgets only

Question 20

Which of the following are true about financial ratio analysis?

A)Financial ratio analysis is only used to calculate break-even points
B)Financial ratio analysis is a way of organising and interpreting information from financial data
C)Financial ratio analysis not important from a business standpoint
D)Financial ratio analysis is used to evaluate your accountant's work