Innovation and Entrepreneurship 2023 Actual Exam Questions And Answers

Innovation and Entrepreneurship 2023 Actual Exam Questions And Answers The key starting point for any decision to exit or harvest the firm is establishing the _____ of the firm. - ANSWER- valuation If a business is strong now but the entrepreneurship senses that the future does not hold the same potential, then it might be a good time to _____ or harvest the business. - ANSWER- exit Why might an entrepreneur consider exiting or harvesting a business? - ANSWER- -If the business takes too much time and personal commitment. -If the business is successful but no longer interesting or enjoyable. -If the entrepreneur doesn't have the time to run an existing business and pursue a new opportunity. What is the art of trying to reach an agreed-upon price between a willing buyer and a willing seller? - ANSWER- Negotiating. Which of the following statements are true regarding the price/earnings valuation method? - ANSWER- -The P/E ratio should be multiplied by the net cash flow for year 5 and discounted back as a sales price in year 6. -It requires the founder to locate the P/E ratio for public companies in the same industry. -It is a straightforward system that uses the industry in which the start-up operates. Which method of valuation is performed by taking the net profit of the organization; subtracting or adding any unusual items; and dividing that figure by a capitalization rate? - ANSWER- Capitalization of earnings valuation. T/F: The capitalization rate of a firm is something that can be "looked up" rather than a generally agreed upon number. - ANSWER- FALSE. Which of the valuation methods involves taking the projected earnings of the business and multiplying that figure by the market premium of companies in their industry? - ANSWER- Market estimation valuation. Taking the earnings before interest, taxes, depreciation, and amortization, reworking the figure based on analysis of the cash flow statement, and multiplying the remaining figure by a market multiple is a popular method for which valuation technique? - ANSWER- Market estimation valuation. T/F: In the context of market estimation valuation, an industry multiple can be used to calculate the value of a business. - ANSWER- TRUE. Assuming a net profit of $350,000 and an industry multiple of 12, calculate the value of the business using the market estimation technique. - ANSWER- $4,200,000. Every company has unique features that provide it with some type of __________. - ANSWER- competitive advantage. One of the key issues for the survival of the business after the sale is the change in _____ that will occur. - ANSWER- leadership When preparing a business for sale, it is important that its operational procedures are __________ for easy handover to a new owner. - ANSWER- simplified written codified The owner of a firm considering a sale should have a CPA audit the current year's and last year's financial statements of the business and __________. - ANSWER- put all the statements into a standardized format.