Business Planning
Exam Review
Course Introduction
Business Planning explores the foundational concepts and practical processes involved in developing effective business plans for new ventures or existing organizations. The course covers key topics such as market analysis, competitive strategy, organizational structure, operations, financial forecasting, and risk management. Students learn to assess business opportunities, formulate strategic goals, and translate ideas into actionable plans that can attract investment and guide business growth. Through case studies and hands-on projects, students gain the skills necessary to create comprehensive business plans and present them to stakeholders.
Recommended Textbook
Entrepreneurial Finance 4th Edition by J.
Chris Leach
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15 Chapters
1018 Verified Questions
1018 Flashcards
Source URL: https://quizplus.com/study-set/3582
Page 2
Chapter 1: Introduction and Overview
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86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/71133
Sample Questions
Q1) Which of the following does not describe activity during the venture's life cycle startup stage?
A)venture's organization
B)venture's development
C)operating cash flows are generated
D)initial revenue model is put in place
Answer: C
Q2) Successful entrepreneurs exhibit which of the following traits?
A)recognize and seize commercial opportunities
B)economic pessimism
C)tend to be doggedly optimistic
D)both a and b
E)both a and c
Answer: E
Q3) Private financial markets are a place where standardized contracts or securities are traded on organized security exchanges with restrictions on how they can be transferred.
A)True
B)False
Answer: False
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Chapter 2: From the Idea to the Business Plan
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82 Verified Questions
82 Flashcards
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Sample Questions
Q1) Revenues minus the cost of goods sold is called
A)gross profit
B)gross profit margin
C)net profit
D)net profit margin
Answer: A
Q2) The compound rate of return that equates the present value of the cash inflows with the initial investment outlay is called the internal rate of return (IRR).
A)True
B)False
Answer: True
Q3) Return on assets can be stated as which of the following?
A)net after-tax profit divided by total assets
B)net profit margin times asset turnover
C)net cash flow divided by total assets
D)both a and b
E)both a and c
Answer: D
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4
Chapter 3: Organizing and Financing a New Venture
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79 Verified Questions
79 Flashcards
Source URL: https://quizplus.com/quiz/71125
Sample Questions
Q1) Patents are intellectual property rights granted for inventions that are:
A)not useful,novel,and non-obvious
B)not useful,not novel,and obvious
C)useful,novel,and non-obvious
D)useful,not novel,and obvious
Answer: C
Q2) A trademark must be novel in order to receive protection.
A)True
B)False
Answer: False
Q3) Wealthy individuals who invest in early stage ventures in exchange for the excitement of launching a business and a share in any financial rewards are known as:
A)creditors
B)white knights
C)corporate raiders
D)business angels
E)stakeholders
Answer: D
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5
Chapter 4: Measuring Financial Performance
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68 Verified Questions
68 Flashcards
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Sample Questions
Q1) Production assets (e.g. ,inventories and equipment to produce products and give credit to customers)usually occurs during the development stage in a new venture's life cycle.
A)True
B)False
Q2) During the development stage in a new venture's life cycle,the balance sheet reflects the acquisition of initial assets and the obtaining of seed financing.
A)True
B)False
Q3) "Gross earnings" is equal to:
A)Revenue - After-Tax cost of financial capital used
B)net income ÷ sales
C)(net sales - the cost of production)× tax rate
D)net sales - the cost of production
Q4) During the startup stage in a new venture's life cycle,the income statement typically shows no sales but expenses including the production and market of products or services.
A)True B)False
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Chapter 5: Evaluating Financial Performance
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72 Verified Questions
72 Flashcards
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Sample Questions
Q1) Which of the following is used to examine a venture's performance over time?
A)qualitative analysis
B)trend analysis
C)cross sectional analysis
D)industry comparable analysis
Q2) What is the net profit margin for Runs and Goses?
A)60.0%
B)22.7%
C)7.9%
D)18.4%
E)26.2%
Q3) What is Runs and Goses' sales to total asset ratio?
A)1.91
B)0.25
C)0.52
D)0.23
E)0.57
Q4) "Net working capital" is calculated as fixed assets minus current liabilities.
A)True
B)False
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Chapter 6: Financial Planning:short Term and Long Term
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) If a venture has a return on assets (ROA)= 12%,an equity multiplier based on beginning equity =3.0 times,and a sustainable growth rate of 18%,the retention rate would be:
A)10%
B)20%
C)30%
D)40%
E)50%
Q2) During which round of financing is a venture typically most accurate in forecasting sales?
A)seasoned financing
B)mezzanine financing
C)first round financing
D)startup financing
E)seed financing
Q3) The cost of obtaining additional funds,such as additional interest expenses from borrowing funds,may be explicit and impact AFN.
A)True
B)False
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Page 8
Chapter 7: Types and Costs of Financial Capital
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) Typically,the stocks of closely held corporations aren't publicly traded.
A)True
B)False
Q2) Calculate the after-tax WACC based on the following information:nominal interest rate on debt = 12%;cost of common equity = 25%;common equity = $700,000;interest-bearing debt = $300,000;and a tax rate = 25%.
A)15%
B)16.4%
C)20.2%
D)22.8%
E)30%
Q3) Venture investors generally use which one of the following target rates to discount the projected cash flows of ventures in the "startup" stage of their life cycles:
A)20%
B)25%
C)40%
D)50%
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Page 9
Chapter 8: Securities Law Considerations When Obtaining Venture Financing
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77 Verified Questions
77 Flashcards
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Sample Questions
Q1) An early stage venture that is not an investment company and has written compensation agreements can structure compensation-related securities issues so they are exempt from SEC registration requirements.
A)True
B)False
Q2) The typical business organization for a venture in its rapid-growth stage is a partnership or LLC.
A)True
B)False
Q3) The trading of securities is regulated under the Securities and Exchange Act of 1954.
A)True
B)False
Q4) The two basic types of exemptions from having to register securities with the SEC are security and transaction exemptions.
A)True
B)False
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Page 10
Chapter 9: Valuing Early-Stage Ventures
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62 Verified Questions
62 Flashcards
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Sample Questions
Q1) Your firm has been in business for two years.In its first year,the firm ended with $227,000 of current assets,long-term assets of $143,000,$70,000 in surplus cash,current liabilities of $52,000,and long-term assets of $68,000.At the end of the second year,current assets were $279,000,long-term assets of $195,000,surplus cash of $90,000,current liabilities of $62,000,and long-term assets of $78,000.What is your firm's change in net operating working capital?
A)$22,000
B)$62,000
C)$42,000
D)$244,000
E)$32,000
Q2) The "pseudo dividend method" (PDM)is a valuation method involving zero explicitly forecasted dividends and an adjustment to working capital to strip surplus cash.
A)True B)False
Q3) The reversion value of a venture is the present value of the venture's terminal value. A)True B)False
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11
Chapter 10: Venture Capital Valuation Methods
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54 Verified Questions
54 Flashcards
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Sample Questions
Q1) What is the percent ownership of our venture that must be sold in order to provide the venture investor's target return?
A)33.33%
B)75.94%
C)12.76%
D)15.00%
Q2) A P/E multiple refers to:
A)price/expectations multiple
B)price/earnings multiple
C)profit/EBIT multiple
D)profit/earnings multiple
E)price/EBITDA multiple
Q3) The two "just-in-time" capital methods are:
A)DDA and VCSC
B)DDA and PDM
C)VSCS and MDM
D)MDM and PDM
Q4) The VSCS is like a post-money version of the DDA.
A)True
B)False
Page 12
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Chapter 11: Professional Venture Capital
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) "Due diligence," in venture investing context,is the process of ascertaining the viability of a business plan.
A)True
B)False
Q2) Endowments and foundations are more important suppliers of venture capital relative to individuals and families.
A)True
B)False
Q3) The phrase "two and twenty shops" refers to investment management firms having a contract that gives them two percent carried interest and 20 percent of assets annual management fee.
A)True
B)False
Q4) Term sheets may contain demands regarding the voting rights of shares issued to venture investors.
A)True
B)False
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Chapter 12: Other Financing Alternatives
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59 Verified Questions
59 Flashcards
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Sample Questions
Q1) By an act of Congress,the Small Business Administration (SBA)was created for the purpose of fostering the initiation and growth of small businesses.
A)True
B)False
Q2) Commercial loan officers have the expertise to project new venture's business successes,and thus are as willing to make funds available to entrepreneurs on the same basis as other businesses.
A)True
B)False
Q3) When assessing the creditworthiness of new entrepreneurs,lending institutions review the "Five C's".The focus on the intended purpose of the loan is known as:
A)capacity
B)capital
C)collateral
D)conditions
E)character
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Page 14
Chapter 13: Security Structures and Determining Enterprise
Values
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57 Verified Questions
57 Flashcards
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Sample Questions
Q1) A round of financing where shares sell for a lower price than previous rounds is known as a:
A)down round
B)recessive round
C)reset round
D)a and c
Q2) An option granting the right to sell a stock at $10 when that stock currently has a market price $8 is "in the money."
A)True
B)False
Q3) The enterprise method of valuation can be executed with either an after-tax or before-tax weighted cost of capital as long as the rate is applied to the appropriate enterprise cash flows.
A)True
B)False
Q4) Convertible preferred stockholders have the right to convert a preferred share into a specified number of common shares at any time after the expiration date.
A)True
B)False
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Chapter 14: Harvesting the Business Venture Investment
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66 Verified Questions
66 Flashcards
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Sample Questions
Q1) Which of the following is not a disadvantage of a systematic liquidation?
A)the treatment and taxation of liquidation proceeds as ordinary income rather than capital gains
B)the commitment of the entrepreneur's resources and focus on a dying venture rather than on other more lucrative ventures
C)the harvesting of the investment gets spread out over a number of years
D)the acceleration of the venture's rate of decline as other industry participants respond to the reduction in investment
Q2) When an initial business plan is prepared,attention should be paid to the investors' and founders' desire for eventual liquidity by anticipating a harvest for the venture investors.
A)True
B)False
Q3) The sale of used shares is known as:
A)primary offering
B)secondary offering
C)initial public offering
D)shelf offering
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Chapter 15: Financially Troubled Ventures: Turnaround Opportunities
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67 Verified Questions
67 Flashcards
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Sample Questions
Q1) Operations restructuring involves growing revenues relative to costs and/or cutting costs relative to the ventures revenues.
A)True
B)False
Q2) "Financial restructuring" involves:
A)improving the working-capital-to-sales relationship
B)growing revenues relative to costs
C)changing the composition of existing debt claims against the venture
D)cutting costs relative to the venture's revenues
E)a and c above
F)b and c above
Q3) During the rapid growth stage of a venture's life cycle,which of the following is not a basis for operating or financial decisions?
A)creating and building value
B)obtaining additional financing
C)choosing the organizational structure
D)examining exit opportunities
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Page 17