EEE-2023-EXAM 2 QUESTIONS AND ANSWERS
What are five red flags in business plans? - Answers :Founders with none of their own
money at risk, a poorly cited plan, defining the market size too broadly, overly
aggressive financials, sloppiness in any area
What are the two primary audiences for a firm's business plan? - Answers :Its
employees and potential investors
Part of a business plan that describes the industry a business will enter - Answers
:Industry analysis
What are the four primary financial objectives of Entrepreneurial firms? - Answers
:Profitability, Liquidity, Efficiency, and Stability
What is the process of financial management? - Answers :1. Preparation of historical
financial statements, 2. Preparation of forecasts, 3. Preparation of pro forma financial
statements , 4. Ongoing analysis of financial results
What are the two primary functions of the financial management firm? - Answers :Raise
money and managing finances in a way that achieves the highest rate of return
What are the 6 elements of a new-venture team? - Answers :Management, key
employees, board of directors, other professionals, lenders and investors, board of
advisors
What are some attributes that affect a founder's chance of launching a successful firm?
- Answers :level of education, prior entrepreneurial experience, relevant industry
experience, and the ability to network
What are three reasons start-ups need funding? - Answers :Cash flow challenges,
capital investments, lengthy product development cycles
What are the three sources of personal financing? - Answers :Personal funds, friends
and family, bootstrapping
What are the three steps of preparing for debt or equity financing? - Answers
:Determine precisely how much money is needed, determine most appropriate type of
funding, develop a strategy for engaging potential investors or bankers
What are the three most important types of equity funding? - Answers :Angel investors,
venture capital, initial public offering
, (blank) is a written narrative, typically between 25 and 35 pages long, that describes
what a new business intends to accomplish and how it intends to accomplish it. -
Answers :business plan
(blank) refers to the process investors go through after they tentatively commit to an
investment. - Answers :Due diligence
Defining the market size too broadly is (blank) in a business plan. - Answers :an
example of a red flag
Dollar Shave Club's "Shave Time, Shave Money" is an example of a(n) (blank). -
Answers :tagline
Jim's Handicrafts' main product sells for $100 and the cost of goods sold is $40. The
$60 (the difference between the two) is called (blank). - Answers :contribution margin
Juiced Up determined that the $11,000 per month rent for their store in Manhattan, New
York was a cost the company had to pay whether it sold something or not. For Juiced
Up, the rental cost was a (blank) cost. - Answers :Fixed
A firm's (blank) is an analysis of its fixed versus variable costs. - Answers :operating
leverage
A(n) (blank) is a panel of individuals elected by a corporation's shareholders to oversee
the management of the firm. - Answers :board of directors
A(n) (blank) chart is a graphic representation of how authority and responsibility are
distributed within the company. - Answers :organization chart
Return on assets is an example of a(n) (blank). - Answers :ratio
A code of conduct is also called a (blank). - Answers :code of ethics
An ethical dilemma is a situation that involves doing something that is beneficial to
oneself or the organization but may be (blank). - Answers :Unethical
Which of the following is an issue typically covered in a founders' agreement? - Answers
:Relative split of the equity among the founders of the firm.
A buyback clause legally obligates the (blank) to sell to the remaining founders their
interest in the firm if the remaining founders are interested. - Answers :departing
founders
All research scientists at Apex Biotechnology are required to sign a (blank) agreement
that binds the employee to not disclose a company's trade secrets. - Answers
:Nondisclosure
What are five red flags in business plans? - Answers :Founders with none of their own
money at risk, a poorly cited plan, defining the market size too broadly, overly
aggressive financials, sloppiness in any area
What are the two primary audiences for a firm's business plan? - Answers :Its
employees and potential investors
Part of a business plan that describes the industry a business will enter - Answers
:Industry analysis
What are the four primary financial objectives of Entrepreneurial firms? - Answers
:Profitability, Liquidity, Efficiency, and Stability
What is the process of financial management? - Answers :1. Preparation of historical
financial statements, 2. Preparation of forecasts, 3. Preparation of pro forma financial
statements , 4. Ongoing analysis of financial results
What are the two primary functions of the financial management firm? - Answers :Raise
money and managing finances in a way that achieves the highest rate of return
What are the 6 elements of a new-venture team? - Answers :Management, key
employees, board of directors, other professionals, lenders and investors, board of
advisors
What are some attributes that affect a founder's chance of launching a successful firm?
- Answers :level of education, prior entrepreneurial experience, relevant industry
experience, and the ability to network
What are three reasons start-ups need funding? - Answers :Cash flow challenges,
capital investments, lengthy product development cycles
What are the three sources of personal financing? - Answers :Personal funds, friends
and family, bootstrapping
What are the three steps of preparing for debt or equity financing? - Answers
:Determine precisely how much money is needed, determine most appropriate type of
funding, develop a strategy for engaging potential investors or bankers
What are the three most important types of equity funding? - Answers :Angel investors,
venture capital, initial public offering
, (blank) is a written narrative, typically between 25 and 35 pages long, that describes
what a new business intends to accomplish and how it intends to accomplish it. -
Answers :business plan
(blank) refers to the process investors go through after they tentatively commit to an
investment. - Answers :Due diligence
Defining the market size too broadly is (blank) in a business plan. - Answers :an
example of a red flag
Dollar Shave Club's "Shave Time, Shave Money" is an example of a(n) (blank). -
Answers :tagline
Jim's Handicrafts' main product sells for $100 and the cost of goods sold is $40. The
$60 (the difference between the two) is called (blank). - Answers :contribution margin
Juiced Up determined that the $11,000 per month rent for their store in Manhattan, New
York was a cost the company had to pay whether it sold something or not. For Juiced
Up, the rental cost was a (blank) cost. - Answers :Fixed
A firm's (blank) is an analysis of its fixed versus variable costs. - Answers :operating
leverage
A(n) (blank) is a panel of individuals elected by a corporation's shareholders to oversee
the management of the firm. - Answers :board of directors
A(n) (blank) chart is a graphic representation of how authority and responsibility are
distributed within the company. - Answers :organization chart
Return on assets is an example of a(n) (blank). - Answers :ratio
A code of conduct is also called a (blank). - Answers :code of ethics
An ethical dilemma is a situation that involves doing something that is beneficial to
oneself or the organization but may be (blank). - Answers :Unethical
Which of the following is an issue typically covered in a founders' agreement? - Answers
:Relative split of the equity among the founders of the firm.
A buyback clause legally obligates the (blank) to sell to the remaining founders their
interest in the firm if the remaining founders are interested. - Answers :departing
founders
All research scientists at Apex Biotechnology are required to sign a (blank) agreement
that binds the employee to not disclose a company's trade secrets. - Answers
:Nondisclosure
