Question 1

The two bottom blocks in the Business Model Canvas are related to financial aspects. What are they called?
A) Income budget
B) Revenue streams
C) Costs budget
D) Cost structure
E) Liquidity planning
F) Budget of results

Accepted Answer

Revenue Streams and Cost Structure are the two components of the Business Model Canvas that directly relate to the financial aspects of a business. Revenue Streams describe the ways in which a company makes money through various sources. Cost Structure outlines the various types of costs a business will incur.

Question 2

The financial aspect of the business model covers what it will cost to create and deliver the value proposition, including all activities, resources and partnerships proposed in the upper sectors of the BMC model.

Accepted Answer

The financial aspect of the business model indeed covers the cost of creating and delivering the value proposition, along with other elements such as revenue streams and cost structure, which are depicted in the lower sections of the BMC model.

Question 3

How much do we need to invest to get started? In other words how much ……… will be required?

Accepted Answer

initial capital

Question 4

What will it cost to produce the product/service and make it ready for sale. In other words, how big are the .………?

Accepted Answer

The answer of What will it cost to produce the...

Question 5

Which costs cannot be avoided regardless of the level of sales? In other words, what ……… will be required to create and deliver the product?

Accepted Answer

The answer of Which costs cannot be avoided regardless of...

Question 6

How much money will be tied up in the inventory and receivables. In other words, how much ……… will be required?

Accepted Answer

The answer of How much money will be tied up...

Question 7

The aggregate anticipated revenue from a variety of sources that the proposition could pull in is referred to in the BMC as ………?

Accepted Answer

The answer of The aggregate anticipated revenue from a variety...

Question 8

Another term from the BMC which expresses that revenue can come from a variety of sources is:
A) payments
B) revenue sources
C) income flow
D) revenue streams

Accepted Answer

The term from the BMC that expresses that revenue can come from a variety of sources is "revenue streams." This term refers to the different channels or means by which an organization generates revenue, such as product sales, subscriptions, advertising, or licensing fees.

Question 9

The book differentiates between customer value and economic value as business models and the propositions they deliver. The point with differentiating between the two is to show that:
A) economic value precedes the customer value, not the other way around
B) economic value is a monetary value extracted from the customer value
C) a business model can create customer value without creating economic value
D) customer value is the economic value of the customer to the company
E) customer value is the company's aggregate revenue from a customer

Accepted Answer

The answer of The book differentiates between customer value and...

Question 10

The book argues in the Financial ABC's that the purpose of the business model is to prevent "silo thinking" between the various parts. This implies that:
A) one understands and stresses the mutual dependence between the various parts of the model, as well as the financial implications of all aspects
B) one has control over the costs and revenue aspects but separates those from the rest
C) one avoids addressing the problems that may arise between customer and company expectations
D) one avoids addressing how costs may affect revenue

Accepted Answer

The statement implies that the purpose of the business model is to prevent silo thinking, meaning all parts should operate interdependently rather than independently. Therefore, understanding and stressing the mutual dependence between the various parts of the model and the financial implications of all aspects is important.

Question 11

To keep liquidity firmly in mind implies that one:
A) controls income and costs
B) ensures that margins are converted into money in
C) ensures there is enough money to run the business at various stages
D) ensures there are profits and that they are used in the right way

Accepted Answer

Keeping liquidity firmly in mind means ensuring that there is enough money to run the business at various stages, which is the focus of choice C. Choices A, B, and D all play a role in overall financial management, but they do not specifically address the importance of liquidity.

Question 12

Liquidity planning forces a company to:
A) think about offering customers a longer credit period
B) think about the timing between when the money comes in and when it needs to be paid out to various parties
C) try to pay suppliers in advance
D) try to increase margins and profits

Accepted Answer

Liquidity planning involves ensuring that a company has enough cash available to meet its financial obligations when they come due. Therefore, it is important to consider the timing of cash inflows and outflows to ensure that there is no shortfall. This may involve adjusting payment terms with customers and suppliers, but it does not necessarily involve offering longer credit periods or paying suppliers in advance. Increasing margins and profits may generate more cash, but it does not necessarily address the issue of liquidity.

Question 13

The book argues that the financial side of a company is separate from the rest and is managed by the financial department.

Accepted Answer

The financial side of a company is intertwined with all other aspects of the business, including operations, marketing, and human resources, and while the financial department plays a key role in managing financial operations, decisions and strategies across all departments can impact the financial health of the company.

Question 14

The book addresses a number of fundamental questions around liquidity and profitability. One difference is the way in which they approach various aspects of time - short-term vs. long-term. Which of these prioritizes the short-term?
A) Liquidity
B) Profitability

Accepted Answer

Liquidity prioritizes short-term time horizons as it focuses on the ability of a company to quickly convert assets into cash or access to funds in case of any unexpected event or financial obligations. Profitability, on the other hand, emphasizes long-term objectives, such as maximizing returns over an extended period.

Question 15

The book addresses a number of fundamental questions around liquidity and profitability. The term connected to the question "Do we have enough money?" is:
A) Liquidity
B) Profitability

Accepted Answer

Liquidity refers to the ability of a company to meet its short-term obligations, including having enough cash on hand to cover expenses and pay bills. Therefore, the question "Do we have enough money?" is directly related to liquidity. Profitability, on the other hand, refers to the company's ability to generate profits over time and is not directly related to the question of having enough money in the short-term.

Question 16

In terms of finances, the book states that a company's eternal dilemma is:
A) that "cash is king"
B) that the break-even point increases over time
C) that costs quickly surpass income
D) that expenditures usually come before payments received

Accepted Answer

Expenditures usually come before payments received is the eternal dilemma for companies because they have to continually invest and spend money on operations, employees, and other expenses, while the payment cycle can take longer, leading to a cash flow gap. This can create financial strain and the need for external financing to bridge the gap.

Question 17

The fundamental equation for liquidation planning is:
A) Opening liquid assets + pay-ins - pay-outs = cash flow
B) Opening liquid assets + pay-ins - pay-outs = closing liquid assets
C) Opening liquid assets + income - costs = closing liquid assets
D) Opening liquid assets +/- gains/losses = closing liquid assets

Accepted Answer

The fundamental equation for liquidation planning is B) Opening liquid assets + pay-ins - pay-outs = closing liquid assets. This equation accurately reflects the process of calculating the closing liquid assets by taking into account the opening balance of liquid assets, adding any inflows (pay-ins), and subtracting any outflows (pay-outs).

Question 18

If the following equation ends in a minus (-), you have a liquidation problem.
Opening liquid assets + pay-ins - pay-outs = closing liquid assets

Accepted Answer

This is true. If the closing liquid assets are less than the opening assets, pay-ins, and pay-outs, then there is a deficit that cannot be covered without liquidating additional assets.

Question 19

Decisions in the upper part of the BMC about quality, prices, service, terms of delivery, inventory, terms of payment, returns policy, discounts, marketing, etc. are translated into money in and money out in liquidity planning.

Accepted Answer

Decisions about various factors in the upper part of the BMC are translated into financial terms in liquidity planning, which involves tracking inflows and outflows of money.

Question 20

Decisions in the upper part of the BMC about quality, prices, service, terms of delivery, inventory, terms of payment, returns policy, discounts, marketing, etc. are translated into gains or losses in liquidity planning.

Accepted Answer

The answer of Decisions in the upper part of the...

Quiz 7: The Business Models Financial Abcs

The two bottom blocks in the Business Model Canvas are related to financial aspects. What are they called?

The financial aspect of the business model covers what it will cost to create and deliver the value proposition, including all activities, resources and partnerships proposed in the upper sectors of the BMC model.

How much do we need to invest to get started? In other words how much ……… will be required?

What will it cost to produce the product/service and make it ready for sale. In other words, how big are the .………?

Which costs cannot be avoided regardless of the level of sales? In other words, what ……… will be required to create and deliver the product?

How much money will be tied up in the inventory and receivables. In other words, how much ……… will be required?

The aggregate anticipated revenue from a variety of sources that the proposition could pull in is referred to in the BMC as ………?

Another term from the BMC which expresses that revenue can come from a variety of sources is:

The book differentiates between customer value and economic value as business models and the propositions they deliver. The point with differentiating between the two is to show that:

The book argues in the Financial ABC's that the purpose of the business model is to prevent "silo thinking" between the various parts. This implies that:

To keep liquidity firmly in mind implies that one:

Liquidity planning forces a company to:

The book argues that the financial side of a company is separate from the rest and is managed by the financial department.

The book addresses a number of fundamental questions around liquidity and profitability. One difference is the way in which they approach various aspects of time - short-term vs. long-term. Which of these prioritizes the short-term?

The book addresses a number of fundamental questions around liquidity and profitability. The term connected to the question "Do we have enough money?" is:

In terms of finances, the book states that a company's eternal dilemma is:

The fundamental equation for liquidation planning is:

If the following equation ends in a minus (-), you have a liquidation problem. Opening liquid assets + pay-ins - pay-outs = closing liquid assets

Decisions in the upper part of the BMC about quality, prices, service, terms of delivery, inventory, terms of payment, returns policy, discounts, marketing, etc. are translated into money in and money out in liquidity planning.

Decisions in the upper part of the BMC about quality, prices, service, terms of delivery, inventory, terms of payment, returns policy, discounts, marketing, etc. are translated into gains or losses in liquidity planning.