Solution manual for entrepreneurial finance 7th edition j chris leach

SOLUTION MANUAL For Entrepreneurial Finance, 7th Edition
by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16,
Complete With CAPSTONE CASES F

,TABLE OF CONTENTS
F F F




PartF1:FTHEFENTREPRENEURIALFENVIRONMENT.
1.FIntroductionFtoF

FinanceFforFEntrepreneurs.
2.FDevelopingFtheFBusinessFIdea.
PartF2:FORGANIZINGFANDFOPERATINGFTHEFVENTURE.
3.FOrganizingFandFFinancingFaFNewFVenture.
4.FPreparingFandFUsingFFinancialFStatements.
5.FEvaluatingFOperatingFandFFinancialFPerformance.
PartF3:FPLANNINGFFORFTHEFFUTURE.
6.FManagingFCashFFlow.
7.FTypesFandFCostsFofFFinancialFCapital.
8.FSecuritiesFLawFConsiderationsFWhenFObtainingFVentureFFinancing.
PartF4:FCREATINGFANDFRECOGNIZINGFVENTUREFVALUE.
9.FProjectingFFinancialFStatements.
10.FValuingFEarly-StageFVentures.
11.FVentureFCapitalFValuationFMethods.
PartF5:FSTRUCTURINGFFINANCINGFFORFTHEFGROWINGFVENTURE.
12.FProfessionalFVentureFCapital.
13.FOtherFFinancingFAlternatives.
14.FSecurityFStructuresFandFDeterminingFEnterpriseFValues.
PartF6:FEXITFANDFTURNAROUNDFSTRATEGIES.
15.FHarvestingFtheFBusinessFVentureFInvestment.
16.FFinanciallyFTroubledFVentures:FTurnaroundFOpportunities?
PartF7:FCAPSTONEFCASES.
CaseF1.FEco-Products,FInc.
CaseF2.FSpatialFTechnology,F

,Chapter 1 F



INTRODUCTIONFTOFFINANCEFFORFENTREPRENEURS

FOCUS

TheFpurposeFofFthisFfirstFchapterFisFtoFpresentFanFoverviewFofFwhatFentrepreneurialFfinanceFisFabout.FInFdoing
FsoFweFhopeFtoFconveyFtoFyouFtheFimportanceFofFunderstandingFandFapplyingFentrepreneurialFfinanceFmetho

dsFandFtoolsFtoFhelpFensureFanFentrepreneurialFventureFisFsuccessful.FWeFpresentFaFlifeFcycleFapproachFtoFtheFt
eachingFofFentrepreneurialFfinanceFwhereFweFcoverFventureFoperatingFandFfinancialFdecisionsFfacedFbyFtheFen
trepreneurFasFaFventureFprogressesFfromFanFideaFthroughFtoFharvestingFtheFventure.

LEARNINGFOBJECTIVES

LOF1.1:FCharacterizeFtheFentrepreneurialFprocess.
LOF1.2:FDescribeFentrepreneurshipFandFsomeFcharacteristicsFofFentrepreneurs.
LOF1.3:FIndicateFseveralFmegatrendsFprovidingFwavesFofFentrepreneurialFopportunities.FLOF1.4:F
ListFandFdescribeFtheFsevenFprinciplesFofFentrepreneurialFfinance.
LOF1.5:FDiscussFentrepreneurialFfinanceFandFtheFroleFofFtheFfinancialFmanager.FLOF1.6:
FDescribeFtheFvariousFstagesFofFaFsuccessfulFventure‘sFlifeFcycle.

LOF1.7:FIdentify,FbyFlifeFcycleFstage,FtheFrelevantFtypesFofFfinancingFandFinvestors.FLOF1.8:F
UnderstandFtheFlifeFcycleFapproachFusedFinFthisFbook.

CHAPTERFOUTLINE

1.1 THEFENTREPRENEURIALFPROCESS
1.2 ENTREPRENEURSHIPFFUNDAMENTALS
A. WhoFisFanFEntrepreneur?
B. BasicFDefinitions
C. EntrepreneurialFTraitsForFCharacteristics
D. OpportunitiesFExistFButFNotFWithoutFRisks
1.3 SOURCESFOFFENTREPRENEURIALFOPPORTUNITIES
A. SocietalFChanges
B. DemographicFChanges
C. TechnologicalFChanges
D. EmergingFEconomiesFandFGlobalFChanges
E. CrisesFandF―Bubbles‖
F. DisruptiveFInnovation


1

, 1.4 PRINCIPLESFOFFENTREPRENEURIALFFINANCE
A. Real,FHuman,FandFFinancialFCapitalFmustFbeFRentedFfromFOwnersF(PrincipleF#1)
B. RiskFandFExpectedFRewardFgoFHandFinFHandF(PrincipleF#2)
C. WhileFAccountingFisFtheFLanguageFofFBusiness,FCashFisFtheFCurrencyF(PrincipleF#3)
D. NewFVentureFFinancingFInvolvesFSearch,FNegotiation,FandFPrivacyF(PrincipleF#4)
E. AFVenture‘sFFinancialFObjectiveFisFtoFIncreaseFValueF(PrincipleF#5)
F. ItFisFDangerousFtoFAssumeFthatFPeopleFActFAgainstFTheirFOwnFSelf-
InterestsF(PrincipleF#6)
G. VentureFCharacterFandFReputationFcanFbeFAssetsForFLiabilitiesF(PrincipleF#7)
1.5 ROLEFOFFENTREPRENEURIALFFINANCE
1.6 THEFSUCCESSFULFVENTUREFLIFEFCYCLE
A. DevelopmentFStage
B. StartupFStage
C. SurvivalFStage
D. Rapid-GrowthFStage
E. Early-MaturityFStage
F. LifeFCycleFStagesFandFtheFEntrepreneurialFProcess
1.7 FINANCINGFTHROUGHFTHEFVENTUREFLIFEFCYCLE
A. SeedFFinancing
B. StartupFFinancing
C. First-RoundFFinancing
D. Second-RoundFFinancing
E. MezzanineFFinancing
F. Liquidity-StageFFinancing
G. SeasonedFFinancing
1.8 LIFEFCYCLEFAPPROACHFFORFTEACHINGFENTREPRENEURIALFFINANCEFSUMMAR
Y


DISCUSSIONFQUESTIONSFANDFANSWERS

1. WhatFisFtheFentrepreneurialFprocess?

TheFentrepreneurialFprocessFcomprises:FdevelopingFopportunities,FgatheringFresources,FandFmanagin
gFandFbuildingFoperationsFwithFtheFgoalFofFcreatingFvalue.

2. WhatFisFentrepreneurship?FWhatFareFsomeFbasicFcharacteristicsFofFentrepreneurs?

EntrepreneurshipFisFtheFprocessFofFchangingFideasFintoFcommercialFopportunitiesFandFcreatingFvalue.F W
hileFthereFisFnoFprototypicalFentrepreneur,FmanyFareFgoodFatFrecognizingFcommercialFopportunities,Fte
ndFtoFbeFoptimistic,FandFenvisionFaFplanFforFtheFfuture.

3. WhyFdoFbusinessesFcloseForFceaseFoperating?FWhatFareFtheFprimaryFreasonsFwhyFbusinessesFfail?