AEM 1200 Final Study Guide questions with
correct answers
Balance Sheet - Answer A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders' equity.
Income Statement - Answer A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.
Statement of Cash Flows - Answer Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
Accounting Equation - Answer Assets = Liabilities + Owner's Equity
Objectives of financial statement analysis - Answer Find out how liquid, profitable and efficient an enterprise is
Ratio analysis - Answer Dependent on industry, size, and interdependence
Current ratio - Answer Current assists/ current liabilities
Acid (quick) ratio - Answer (Current assets-inventory)/ current liabilities
Debt-to-equity ratio - Answer Debt/ equity
Profitability Ratios - Answer -Return to Equity -Return to sales
-Earnings per share
Inventory Turnover - Answer COGS/ inventory
Accounts receivable turnover - Answer Accounts receivable/ daily sales
Accounts payable turnover - Answer Accounts payable/ daily CGS
Short Term Finance - Answer -Budgeting
-managing accounts receivable + payable
-managing short term investments
-managing short term debt
Long Term Finance - Answer -Capital structure (how much debt, how much equity)
-Dealing with long term investments
Finance Checklist - Answer 1. Take Debt
2. If too much debt, try to reduce costs while keeping revenue constant
3. If too much debt, increase revenue at a faster pace
4. If none of the above is available/ fast enough, you need equity
Entrepreneur - Answer One who organizes, manages, and assumes the risks of a business or enterprise; creates new markets and market segments, uses organizational and market flexibility to gain customers and market share Managers - Answer -plan, organize, lead, control
-Compete in well defined markets
-use competitive advantages, market recognitions and positioning to maintain and improve profitability
Typical Entrepreneurial Effort - Answer -requires less than $5,000 of capital to get started (only 3% need more than $100,000)
-lasts less than 3 years and is usually abandoned or ends in bankruptcy
Entrepreneurial Process - Answer -opportunity recognition
-gathering of resources
-launching of a new venture
-building and managing growth
-the harvest
Idea Components - Answer 1. Product (which can be a good or service)
2. Target market (set of individuals or firms/ organizations who would find the product attractive)
3. Connection (between the product and the target market; a reason why the target market would buy/ use the product)
Ideas must be - Answer Legal, feasible, able to stand alone
What are investors looking for? - Answer -an excellent venture team with motivation, passion, honesty and experience
correct answers
Balance Sheet - Answer A report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders' equity.
Income Statement - Answer A financial statement that reports a company's revenues and expenses and resulting net income or net loss for a specific period of time.
Statement of Cash Flows - Answer Financial statement that reports cash receipts and disbursements related to a firm's three major activities: operations, investments, and financing.
Accounting Equation - Answer Assets = Liabilities + Owner's Equity
Objectives of financial statement analysis - Answer Find out how liquid, profitable and efficient an enterprise is
Ratio analysis - Answer Dependent on industry, size, and interdependence
Current ratio - Answer Current assists/ current liabilities
Acid (quick) ratio - Answer (Current assets-inventory)/ current liabilities
Debt-to-equity ratio - Answer Debt/ equity
Profitability Ratios - Answer -Return to Equity -Return to sales
-Earnings per share
Inventory Turnover - Answer COGS/ inventory
Accounts receivable turnover - Answer Accounts receivable/ daily sales
Accounts payable turnover - Answer Accounts payable/ daily CGS
Short Term Finance - Answer -Budgeting
-managing accounts receivable + payable
-managing short term investments
-managing short term debt
Long Term Finance - Answer -Capital structure (how much debt, how much equity)
-Dealing with long term investments
Finance Checklist - Answer 1. Take Debt
2. If too much debt, try to reduce costs while keeping revenue constant
3. If too much debt, increase revenue at a faster pace
4. If none of the above is available/ fast enough, you need equity
Entrepreneur - Answer One who organizes, manages, and assumes the risks of a business or enterprise; creates new markets and market segments, uses organizational and market flexibility to gain customers and market share Managers - Answer -plan, organize, lead, control
-Compete in well defined markets
-use competitive advantages, market recognitions and positioning to maintain and improve profitability
Typical Entrepreneurial Effort - Answer -requires less than $5,000 of capital to get started (only 3% need more than $100,000)
-lasts less than 3 years and is usually abandoned or ends in bankruptcy
Entrepreneurial Process - Answer -opportunity recognition
-gathering of resources
-launching of a new venture
-building and managing growth
-the harvest
Idea Components - Answer 1. Product (which can be a good or service)
2. Target market (set of individuals or firms/ organizations who would find the product attractive)
3. Connection (between the product and the target market; a reason why the target market would buy/ use the product)
Ideas must be - Answer Legal, feasible, able to stand alone
What are investors looking for? - Answer -an excellent venture team with motivation, passion, honesty and experience
