EEE 457 MIDTERM TEST BANK
QUESTIONS WITH COMPLETE
SOLUTIONS
Limited Partnership - Answer-a business structure that consists of at least one general
partner and one limited partner. The general partner manages the business and is
personally liable for its debts, while the limited partner contributes capital but has limited
liability, meaning they are only responsible for the business's debts up to the amount
they invested. This structure allows for a combination of active management and
passive investment
Corporations - Answer-a legal entity that is separate from its owners, providing them
with limited liability protection. This means that shareholders are typically not personally
responsible for the corporation's debts or legal obligations. Corporations can raise
capital by issuing stock and have a structured management system, often governed by
a board of directors. They can exist indefinitely, making them suitable for long-term
business operations. Corporations are subject to specific regulations and taxation,
which can vary by jurisdiction
Limited Liability Company - Answer-A Limited Liability Company (LLC) is a flexible
business structure that combines elements of both corporations and partnerships. It
offers limited liability protection to its owners (known as members), meaning their
personal assets are generally protected from the company's debts and liabilities. LLCs
can have one or multiple members and allow for pass-through taxation, where profits
and losses are reported on the members' personal tax returns, avoiding double taxation.
This structure is often chosen for its operational flexibility, fewer formalities, and ease of
management.
4o mini
Operations Model - Answer-1. Identify Your Process
2. Describe Your Strategy
3. Consider Geography, Facilities, Equipment Needed
4. Identify Legal Issues and related costs
Value Curve - Answer-horizontal connection of the points of each value on the strategy
canvas that helps strategists diagnose and determine courses of action
Shares Outstanding - Answer-are all the share of a corporation or entity that have been
authorized and issued to owners and are presently held by them. Percentage of
ownership is based upon issued shares
, Treasury Stock - Answer-companies normally initially issue less than the authorized
amount of shares. The companies normally retain some authorized shares in the
company for future issuance
Magnitude of Loss X Probability of Loss - Answer-Risk =
Magnitude of Profit X Probability of Profit - Answer-Risk Reward
(Sinking Boat, Missing Boat) - Answer-Entrepreneurial Risk has two parts
The Sinking Boat - Answer-Entrepreneurial Risk: What if I pursue an entrepreneurial
concept and fail.
- Steadily declines as you add more planning time
- However, missing the boat risk rises as you add more planning time
- However, missing the boat risk rises as you add more planning time
- Pursuing the venture and failing
The Missing Boat - Answer-Entrepreneurial Risk: What is the risk of not pursuing a
course of action that would been profitable
- Often caused by not the venture until it too late
- Lost revenue and Lost opportunity
- Almost an opportunity cost
- Not pursuing the venture until it is too late
Internal Problems and Risks - Answer-- Running out of cash before orders are secured
- design or manufacturing costs in excess of estimates
- sales projections not achieved
- larger-than-expected innovation and development costs
- running out of cash after order pour in
External Problems and Risks - Answer-- potential price cuts by competitors
- any potential unfavorable industry wide trends
- difficulties or long lead times encountered in the procurement of parts or raw materials
- Difficulties encountered in obtaining needed bank credit
Managing Risk - Answer-- rent or lease rather than owning equipment & facilities
- outsourcing options
- contractors vs. employees
- using multiple sources of financing
- building an entrepreneurial team whose members have different but compatible skills
"complementary"
Common Causes of Failure - Answer-- managerial incompetence
- lack of experience
- poor financial control
- failure to plan
QUESTIONS WITH COMPLETE
SOLUTIONS
Limited Partnership - Answer-a business structure that consists of at least one general
partner and one limited partner. The general partner manages the business and is
personally liable for its debts, while the limited partner contributes capital but has limited
liability, meaning they are only responsible for the business's debts up to the amount
they invested. This structure allows for a combination of active management and
passive investment
Corporations - Answer-a legal entity that is separate from its owners, providing them
with limited liability protection. This means that shareholders are typically not personally
responsible for the corporation's debts or legal obligations. Corporations can raise
capital by issuing stock and have a structured management system, often governed by
a board of directors. They can exist indefinitely, making them suitable for long-term
business operations. Corporations are subject to specific regulations and taxation,
which can vary by jurisdiction
Limited Liability Company - Answer-A Limited Liability Company (LLC) is a flexible
business structure that combines elements of both corporations and partnerships. It
offers limited liability protection to its owners (known as members), meaning their
personal assets are generally protected from the company's debts and liabilities. LLCs
can have one or multiple members and allow for pass-through taxation, where profits
and losses are reported on the members' personal tax returns, avoiding double taxation.
This structure is often chosen for its operational flexibility, fewer formalities, and ease of
management.
4o mini
Operations Model - Answer-1. Identify Your Process
2. Describe Your Strategy
3. Consider Geography, Facilities, Equipment Needed
4. Identify Legal Issues and related costs
Value Curve - Answer-horizontal connection of the points of each value on the strategy
canvas that helps strategists diagnose and determine courses of action
Shares Outstanding - Answer-are all the share of a corporation or entity that have been
authorized and issued to owners and are presently held by them. Percentage of
ownership is based upon issued shares
, Treasury Stock - Answer-companies normally initially issue less than the authorized
amount of shares. The companies normally retain some authorized shares in the
company for future issuance
Magnitude of Loss X Probability of Loss - Answer-Risk =
Magnitude of Profit X Probability of Profit - Answer-Risk Reward
(Sinking Boat, Missing Boat) - Answer-Entrepreneurial Risk has two parts
The Sinking Boat - Answer-Entrepreneurial Risk: What if I pursue an entrepreneurial
concept and fail.
- Steadily declines as you add more planning time
- However, missing the boat risk rises as you add more planning time
- However, missing the boat risk rises as you add more planning time
- Pursuing the venture and failing
The Missing Boat - Answer-Entrepreneurial Risk: What is the risk of not pursuing a
course of action that would been profitable
- Often caused by not the venture until it too late
- Lost revenue and Lost opportunity
- Almost an opportunity cost
- Not pursuing the venture until it is too late
Internal Problems and Risks - Answer-- Running out of cash before orders are secured
- design or manufacturing costs in excess of estimates
- sales projections not achieved
- larger-than-expected innovation and development costs
- running out of cash after order pour in
External Problems and Risks - Answer-- potential price cuts by competitors
- any potential unfavorable industry wide trends
- difficulties or long lead times encountered in the procurement of parts or raw materials
- Difficulties encountered in obtaining needed bank credit
Managing Risk - Answer-- rent or lease rather than owning equipment & facilities
- outsourcing options
- contractors vs. employees
- using multiple sources of financing
- building an entrepreneurial team whose members have different but compatible skills
"complementary"
Common Causes of Failure - Answer-- managerial incompetence
- lack of experience
- poor financial control
- failure to plan
