Strategic Management Exam Review
Course Introduction
Strategic Management explores the formulation, implementation, and evaluation of cross-functional decisions that enable organizations to achieve long-term objectives and sustain competitive advantage. The course covers key concepts such as environmental analysis, strategy formulation, competitive positioning, and execution, emphasizing the integration of business functions and the role of leadership in steering organizational direction. Through case studies, analytical tools, and contemporary examples, students develop critical thinking and decision-making skills essential for navigating complex business environments and driving organizational success.
Recommended Textbook
Entrepreneurial Finance 5th Edition by J.
Chris Leach
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16 Chapters
1061 Verified Questions
1061 Flashcards
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Chapter 1: Introduction to Finance for Entrepreneurs
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91 Verified Questions
91 Flashcards
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Sample Questions
Q1) You are considering investing in two independent projects "A" and "B".Project A requires an initial investment of $12,000.In one year,there is a 30% chance of a $10,500 return; a 50% chance of a $12,500 return; and a 20% chance of a $14,500 return.Project B requires an initial investment of $1,000.In one year,there is a 25% chance of a $950 return; a 25% chance of a $1,000 return; and a 50% chance of a $1,200 return.If you require a 7% return on your investment after one year,you should:
A)Accept A and reject B
B)Accept B and reject A
C)Accept both projects
D)Reject both projects
Answer: B
Q2) "Fads" are:
A)not predictable
B)have short lives
C)do not involve macro changes
D)all of the above
Answer: D
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Page 3
Chapter 2: Developing the Business Idea
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Sample Questions
Q1) A venture opportunity-screening guide,called the VOS Indicator,is used to determine potential attractiveness of venture opportunities as business opportunities.
A)True
B)False
Answer: True
Q2) A SWOT analysis focuses on strengths (S),worries (W),opportunities (O),and treats (T).
A)True
B)False
Answer: False
Q3) Business opportunities,because they exist in real time,have a relatively narrow window of opportunity to become a successful business venture.However being the first to market does not guarantee success.
A)True
B)False
Answer: True
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Chapter 3: Organizing and Financing a New Venture
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Sample Questions
Q1) Certification marks are typically used to:
A)indicate membership in a trade group
B)indicate a certain brand of service
C)indicate quality
D)are symbols used to associate products to a specific brand
Answer: C
Q2) Based on 2012 tax schedules,the first dollar of personal taxable income is taxed at which of the following marginal tax rates:
A)05.0%
B)10.0%
C)15.0%
D)20.0%
E)25.0%
Answer: B
Q3) The articles of incorporation are the basic legal declarations contained in the corporate charter.
A)True
B)False
Answer: True
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Page 5
Chapter 4: Preparing and Using Financial Statements
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Sample Questions
Q1) Amounts owed to another for purchase made on credit which come due in less than one year are known as receivables.
A)True
B)False
Q2) Total operating fixed costs (TOFC)equal:
A)cash operating fixed costs (excluding interest expenses)
B)noncash fixed costs (e.g.,depreciation)
C)interest expenses
D)a plus b
E)a plus b plus c
Q3) "Variable expenses" are costs that are expected to remain constant over a range of revenues for a specific time period.
A)True
B)False
Q4) Which of the following is not a characteristic of marketable securities?
A)short-term
B)illiquid
C)high-quality
D)interest-bearing
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Chapter 5: Evaluating Operating and Financial Performance
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64 Verified Questions
64 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) "Net working capital" is calculated as fixed assets minus current liabilities.
A)True
B)False
Q3) Cross-sectional analysis is used to examine a venture's performance over time.
A)True
B)False
Q4) Net working capital reflects current assets deducted from current liabilities.
A)True
B)False
Q5) A venture's cash,marketable securities,and receivables comprise the venture's "liquid assets".
A)True
B)False
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Chapter 6: Managing Cash Flow
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Sample Questions
Q1) Which one of the following "measures" the average days of sales committed to the extension of trade credit?
A)sale-to-cash conversion period
B)inventory-to-sale conversion period
C)purchase-to-payment conversion period
D)cash conversion cycle period
Q2) Calculate the inventory-to-sale conversion period based on the following information:average inventories = $120,000; average receivables = $90,000; average payables = $40,000; cost of goods sold = $182,500; and net sales = $365,000.
A)240.0 days
B)180.0 days
C)90.0 days
D)60.0 days
E)45.0 days
Q3) Due to the difficulty of projecting financial statements for a young firm,short-term financial forecasts are never required of early-stage ventures.
A)True
B)False
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Chapter 7: Types and Costs of Financial Capital
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Sample Questions
Q1) The graph of the term structure of interest rates,which plots interest rates to time to maturity is called the yield curve.
A)True
B)False
Q2) 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%
Q3) The additional premium added to the real interest rate by lenders to compensate them for a debt instrument which cannot be converted to cash quickly at its existing value is called?
A)inflation premium
B)default risk premium
C)liquidity premium
D)maturity premium
E)investment risk premium
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9
Chapter 8: Securities Law Considerations When Obtaining Venture Financing
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Sample Questions
Q1) Rule 503 dictates that for all Reg D exemptions,a Form D should be filed within how many days after the first sale of securities?
A)1 day
B)15 days
C)30 days
D)six months
E)one year
Q2) Which one of the following is not a characteristic of Regulation A?
A)An offering is limited to $5 million
B)the number offerees or investors is limited to 35
C)the offering is a public offering
D)the securities issued can generally be freely resold
Q3) Regulation A issuers are allowed to "test the waters" before preparing the offering circular (unlike almost all other security offerings).
A)True
B)False
Q4) A Regulation D Rule 505 offering is limited to 35 accredited investors.
A)True
B)False
10
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Chapter 9: Projecting Financial Statements
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Sample Questions
Q1) The financial funds still needed to finance asset growth after using spontaneously generated funds and any increase in retained earnings is called:
A)spontaneously generated funds
B)additional funds needed
C)addition in retained earnings
D)financial capital needed
Q2) An "expected value" is:
A)a simple average of a set of scenarios or possible outcomes
B)a weighted average of a set of scenarios or possible outcomes
C)the highest scenario value or outcome
D)the lowest scenario value or outcome
Q3) The weighted average of a set of possible outcomes or scenarios is known as expected values.
A)True
B)False
Q4) Forecasting for firms with operating histories is generally much easier than forecasting for early-stage ventures.
A)True
B)False
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Chapter 10: Valuing Early-Stage Ventures
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Sample Questions
Q1) Surplus cash is the cash remaining after required cash,all operating expenses,and reinvestments are made.
A)True
B)False
Q2) The pseudo dividend method treats surplus cash either as stripped out while not in use or as employed outside the venture and stored in a zero NPV investment.
A)True B)False
Q3) Estimate a venture's equity valuation cash flow based on the following information: net income = $6,372; depreciation = $4,600; change in net operating working capital = $2,415; capital expenditures = $6,900; and new debt issues = $1,000.
A)$6,487
B)$5,487
C)$4,487
D)$3,787
E)$5,787
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Chapter 11: Venture Capital Valuation Methods
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Sample Questions
Q1) The Venture Capital ShortCut (VCSC)method is a post-money version of the Delayed Dividend Approximation (DDA).
A)True
B)False
Q2) Failure to account for any additional rounds of financing and its accompanying dilution in order to meet projected earnings will result in the investor's not receiving an adequate number of shares to ensure the required percent ownership at the time of exit.
A)True
B)False
Q3) What is the pre-money valuation?
A)$120,300
B)$316,800
C)$158,400
D)$193,900
Q4) All of the scenarios in a multiple scenario analysis must have exit cash flows in the same year.
A)True
B)False
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Chapter 12: Professional Venture Capital
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Sample Questions
Q1) The beginning of professional venture capitalists is considered to have begun with the establishment or formation of:
A)Small Business Administration
B)Small Business Investment Companies
C)American Research and Development organization
D)Professional Venture Capitalists organization
Q2) When a syndicate of VCs invests in a venture,the investor in charge of organizing the due diligence process is known as the "lead investor."
A)True
B)False
Q3) All of the following are typical issues addressed in a term sheet except?
A)valuation
B)board structure
C)registration rights
D)management fees
E)employment contracts
Q4) SLOR stands for "standard letter of rejection."
A)True
B)False
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Chapter 13: Other Financing Alternatives
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Sample Questions
Q1) The SBA approves the standard 7(a)loan and guarantees up to 85% of the loan value.
A)True
B)False
Q2) Commercial banks,jointly with not-for-profit Certified Development Companies,are lenders in which of the following SBA credit programs?
A)7(a)loan
B)504 loan
C)microloan
D)venture capital loan
E)credit card loan
Q3) When assessing the creditworthiness of new entrepreneurs,lending institutions review the "Five C's".The general impression the entrepreneur makes on the potential lender or investor is known as:
A)capacity
B)capital
C)collateral
D)conditions
E)character
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Page 15
Chapter 14: Security Structures and Determining Enterprise
Values
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Sample Questions
Q1) Which of the following is not an input to the Black and Scholes model?
A)earnings per share
B)stock price
C)risk free rate
D)volatility
Q2) Which of the following requires that all previously unpaid preferred dividends must be paid prior to any common dividend?
A)paid in kind preferred stock
B)cumulative preferred stock
C)participating preferred stock
D)convertible preferred stock
E)non-cumulative preferred stock
Q3) Options generally have no effect on the value of a venture capital investment.
A)True
B)False
Q4) N(h)in the Black and Scholes model involves the use of
A)the number of shares issued
B)the next time that a venture capitalist will invest money
C)the normal distribution cumulative density function
D)the number of times that the venture will have to raise money
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Chapter 15: Harvesting the Business Venture Investment
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Sample Questions
Q1) If venture investors invest $6,750,000 now,will receive 32% of the exit value,and expect a 22% compounded rate of return on their investment,what is the exit value at the end of seven years?
A)$27,153,298
B)$39,931,321
C)$69,552,505
D)$84,854,057
E)$103,521,949
Q2) ESOP stands for "employee stock ownership plan."
A)True
B)False
Q3) The type of agreement with an investment bank involving the investment bank's underwritten purchase and resale of securities is called:
A)firm commitment
B)best efforts commitment
C)due diligence
D)making a red herring disclaimer
E)a private placement
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17
Chapter 16: Financially Troubled Ventures: Turnaround Opportunities
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67 Verified Questions
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Sample Questions
Q1) Which of the following provides that all future interest and principal obligations on a loan become immediately due when default occurs?
A)insolvency
B)loan default
C)acceleration provision
D)cross default provision
E)foreclosure
Q2) Which of the following refers to postponing due dates for interest and principal on loans and payments on credit purchases?
A)debt payment extensions
B)asset restructuring
C)financial restructuring
D)debt composition change
Q3) During the survival stage of a venture's life cycle,which of the following is not a basis for operating or financial decisions?
A)monitoring financial performance
B)obtaining seasoned financing
C)projecting cash needs
D)obtaining first round financing
Page 18
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