EEE 457 MIDTERM EXAM QUESTIONS
WITH 100% CORRECT ANSWERS
Operations model - Answer-1. Identify your process, 2. Describe your strategy, 3.
Consider geography, facilities & equipment needed
Value curve - Answer-finding the balance between importance to market and
performance
Authorized stock - Answer-the number of shares a company CAN issue in total (without
additional legal work)
issued/outstanding stock - Answer-shares that are authorized AND issued to owners
that presently hold them
Percentage of ownership is based on - Answer-Issued Shares
Treasury stock - Answer-authorized shares that are not issued and are held for future
use
Reward = - Answer-magnitude of profit x probability of profit
Entrepreneurial risk has two parts - Answer-1. Sinking boat, 2. Missing the boat
Sinking boat - Answer-creating the business and failing (declines over time)
Missing the boat - Answer-the longer you wait, the more likely someone or something
else takes the market gap instead (increases over time)
Pro forma means - Answer-projected
Accounting equation - Answer-assets=liabilities+owner's equity
Balance sheet - Answer-snapshot of time on a specific date, assets on the left, liabilities
on the right
Items are arranged in order of - Answer-liquidity
Income statement - Answer-revenues, expenses, and taxes over a period of time
Statement of cash flows - Answer-sources and uses of cash for the reporting period
Liquidity ratio - Answer-measures the working capital
, Current ratio - Answer-shows the ability of a business to generate cahs to meet short-
term obligations (current assets/current liabilities)
Quick ratio - Answer-ability to cover obligations quickly (current assets-
inventory)/current liabilities
Return on investment - Answer-net income/owner's equity
Need for valuation - Answer-1. Buying a business, 2. Selling a business, 3. Selling
additional equity, 4. Determining ROI, 5. Transferring a family owned business
Valuation is an_ - Answer-art not a science and is used for negotiation
Start with a __ (quant/qual) assessment THEN move onto the other - Answer-
quantitative
DCF - Answer-values an asset as equal to the present value of future cash flows
Present valuation - Answer-a dollar is worth more today than tomorrow (because of risk,
inflation, and lack of investment)
Market data approach - Answer-comparing P/E ratio of a publicly traded company to
your own
Turbulence in the market = opportunity for change - Answer-
A thinker ends the entrepreneurial process at step __ - Answer-2 (developing the
business concept)
Public policy planning - Answer-finding your niche AND creating regulations that help
support it
Why did Micron pick Syracuse - Answer-lots of college graduates, lots of water and
cheap land, government bought lots of land to attract tech companies
Business concepts represent - Answer-ways to capitalize on that potential/opportunity
Ways to spot an opportunity - Answer-industry experience, social factors, cognitive
factors
Opportunity discovery methods - Answer-creative thinking, brainstorming, problem
solving technology
The innovation curve includes - Answer-innovators and early adopters (only need to
capture about 16% of the market)
WITH 100% CORRECT ANSWERS
Operations model - Answer-1. Identify your process, 2. Describe your strategy, 3.
Consider geography, facilities & equipment needed
Value curve - Answer-finding the balance between importance to market and
performance
Authorized stock - Answer-the number of shares a company CAN issue in total (without
additional legal work)
issued/outstanding stock - Answer-shares that are authorized AND issued to owners
that presently hold them
Percentage of ownership is based on - Answer-Issued Shares
Treasury stock - Answer-authorized shares that are not issued and are held for future
use
Reward = - Answer-magnitude of profit x probability of profit
Entrepreneurial risk has two parts - Answer-1. Sinking boat, 2. Missing the boat
Sinking boat - Answer-creating the business and failing (declines over time)
Missing the boat - Answer-the longer you wait, the more likely someone or something
else takes the market gap instead (increases over time)
Pro forma means - Answer-projected
Accounting equation - Answer-assets=liabilities+owner's equity
Balance sheet - Answer-snapshot of time on a specific date, assets on the left, liabilities
on the right
Items are arranged in order of - Answer-liquidity
Income statement - Answer-revenues, expenses, and taxes over a period of time
Statement of cash flows - Answer-sources and uses of cash for the reporting period
Liquidity ratio - Answer-measures the working capital
, Current ratio - Answer-shows the ability of a business to generate cahs to meet short-
term obligations (current assets/current liabilities)
Quick ratio - Answer-ability to cover obligations quickly (current assets-
inventory)/current liabilities
Return on investment - Answer-net income/owner's equity
Need for valuation - Answer-1. Buying a business, 2. Selling a business, 3. Selling
additional equity, 4. Determining ROI, 5. Transferring a family owned business
Valuation is an_ - Answer-art not a science and is used for negotiation
Start with a __ (quant/qual) assessment THEN move onto the other - Answer-
quantitative
DCF - Answer-values an asset as equal to the present value of future cash flows
Present valuation - Answer-a dollar is worth more today than tomorrow (because of risk,
inflation, and lack of investment)
Market data approach - Answer-comparing P/E ratio of a publicly traded company to
your own
Turbulence in the market = opportunity for change - Answer-
A thinker ends the entrepreneurial process at step __ - Answer-2 (developing the
business concept)
Public policy planning - Answer-finding your niche AND creating regulations that help
support it
Why did Micron pick Syracuse - Answer-lots of college graduates, lots of water and
cheap land, government bought lots of land to attract tech companies
Business concepts represent - Answer-ways to capitalize on that potential/opportunity
Ways to spot an opportunity - Answer-industry experience, social factors, cognitive
factors
Opportunity discovery methods - Answer-creative thinking, brainstorming, problem
solving technology
The innovation curve includes - Answer-innovators and early adopters (only need to
capture about 16% of the market)
