Solution Manual for Entrepreneurial Finance 7th Edition by J. Leach and Ronald Melicher ISBN-9780357442043 All Chapters 1-16 Complete Guide

SOLUTIONMANUAL m




EntrepreneurialFinance,7thEdition
m m m




J. Chris Leach, Ronald W. Melicher
m m m m m




Chapters1 -16 WithCAPSTONE CASES
m m m m m m

,TABLE OF CONTENTS m m m




Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
m m m m




1. Introduction to Finance for Entrepreneurs. m m m m




2. Developing the Business Idea. m m m




Part 2: ORGANIZING AND OPERATING THE VENTURE.
m m m m m m




3. Organizing and Financing a New Venture. m m m m m




4. Preparing and Using Financial Statements. m m m m




5. Evaluating Operating and Financial Performance. Part m m m m m




3: PLANNING FOR THE FUTURE.
m m m m m




6. Managing Cash Flow. m m




7. Types and Costs of Financial Capital.
m m m m m




8. Securities Law Considerations When Obtaining Venture Financing. Part 4:
m m m m m m m m




CREATING AND RECOGNIZING VENTURE VALUE.
m m m m m




9. Projecting Financial Statements. m m




10. Valuing Early-Stage Ventures. m m




11. Venture Capital Valuation Methods. m m m




Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
m m m m m m m




12. Professional Venture Capital. m m




13. Other Financing Alternatives.
m m




14. Security Structures and Determining Enterprise Values. Part 6:
m m m m m m m




EXIT AND TURNAROUND STRATEGIES.
m m m m




15. Harvesting the Business Venture Investment. m m m m




16. Financially Troubled Ventures: Turnaround Opportunities? Part 7: m m m m m m




CAPSTONE CASES.
m m




Case 1. Eco-Products, Inc. Case 2.
m m m m m




Spatial Technology,
m m

,Chapter 1 m




INTRODUCTION TO FINANCE FOR ENTREPRENEURS FOCUS m m m m m




The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In
m m m m m m m m m m m m m m m m m




doing so we hope to convey to you the importance of understanding and applying entrepreneurial
m m m m m m m m m m m m m m m




finance methods and tools to help ensure an entrepreneurial venture is successful.We present a life
m m m m m m m m m m m m m m m




cycle approach to the teaching of entrepreneurial finance where we cover venture operating and
m m m m m m m m m m m m m m




financial decisions faced by the entrepreneur as a venture progresses from an idea through to
m m m m m m m m m m m m m m m




harvesting the venture.
m m m




LEARNING OBJECTIVES m




LO 1.1: Characterize the entrepreneurial process.
m m m m m




LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs. LO
m m m m m m m m m




1.3: Indicate several megatrends providing waves of entrepreneurial
m m m m m m m m




mopportunities.LO 1.4: List and describe the seven principles of entrepreneurial m m m m m m m m m




mfinance.
LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO
m m m m m m m m m m m




1.6: Describe the various stages of a successful venture‘s life cycle.
m m m m m m m m m m m




LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors.LO
m m m m m m m m m m m m m




1.8: Understand the life cycle approach used in this book.
m m m m m m m m m m




CHAPTER OUTLINE m




1.1 THE ENTREPRENEURIAL PROCESS m m




1.2 ENTREPRENEURSHIP FUNDAMENTALS m




A. Who is an Entrepreneur? m m m




B. Basic Definitions m




C. Entrepreneurial Traits or Characteristics m m m




D. Opportunities Exist But Not Without Risks m m m m m




1.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES m m m




A. Societal Changes m




B. Demographic Changes m




C. Technological Changes m




D. Emerging Economies and Global Changes m m m m




E. Crises and ―Bubbles‖ m m




F. Disruptive Innovation m




1

, 1.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE m m m




A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
m m m m m m m m m m m




B. Risk and Expected Reward go Hand in Hand (Principle #2)
m m m m m m m m m




C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
m m m m m m m m m m m m




D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
m m m m m m m m m




E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
m m m m m m m m m




F. It is Dangerous to Assume that People Act Against Their Own Self-
m m m m m m m m m m m




Interests(Principle #6)
m m




G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
m m m m m m m m m m




1.5 ROLE OF ENTREPRENEURIAL FINANCE
m m m




1.6 THE SUCCESSFUL VENTURE LIFE CYCLE
m m m m




A. DevelopmentStage m




B. Startup Stage m




C. Survival Stage m




D. Rapid-GrowthStage m




E. Early-MaturityStage m




F. Life Cycle Stages and the Entrepreneurial Process
m m m m m m




1.7 FINANCING THROUGH THE VENTURE LIFE CYCLE m m m m m




A. Seed Financing m




B. Startup Financing m




C. First-Round Financing m




D. Second-Round Financing m




E. Mezzanine Financing m




F. Liquidity-StageFinancing m




G. Seasoned Financing m




1.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE
m m m m m m




SUMMARY
m




DISCUSSION QUESTIONS AND ANSWERS m m m




1. What is the entrepreneurial process?
m m m m




The entrepreneurial process comprises: developing opportunities, gathering resources,
m m m m m m m




mandmanaging and building operations with the goal of creating value.
m m m m m m m m m




2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
m m m m m m m m m




Entrepreneurship is the process of changing ideas into commercial opportunities and
m m m m m m m m m m




mcreatingvalue. While there is no prototypical entrepreneur, many are good at recognizing
mm m m m m m m m m m m




mcommercial opportunities, tend to be optimistic, and envision a plan for the future.
m m m m m m m m m m m m




3. Why do businesses close or cease operating? What are the primary reasons why businesses fail?
m m m m m m m m m m m m m m