Solution manual for entrepreneurial finance 7th edition J. Chris Leach, Ronald W. Melicher

SOLUTIONMANUAL j




EntrepreneurialFinance,7thEdition
j j j




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




Chapters1-16WithCAPSTONE CASES
j j j j j j

,TABLE OF CONTENTS j j j




Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
j j j j



1. Introduction to Finance for Entrepreneurs. j j j j



2. Developing the Business Idea. j j j



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



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



4. Preparing and Using Financial Statements. j j j j



5. Evaluating Operating and Financial Performance. Part 3:
j j j j j j j



PLANNING FOR THE FUTURE. j j j



6. Managing Cash Flow. j j



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



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



EATING AND RECOGNIZING VENTURE VALUE.
j j j j



9. ProjectingFinancial Statements. j j



10. ValuingEarly-Stage Ventures. j j



11. Venture Capital Valuation Methods. j j j



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



12. ProfessionalVenture Capital. j j



13. Other Financing Alternatives.j j



14. Security Structures and Determining Enterprise Values. Part 6: EXI
j j j j j j j j



T AND TURNAROUND STRATEGIES.
j j j



15. Harvestingthe Business Venture Investment. j j j j



16. Financially TroubledVentures: TurnaroundOpportunities? Part 7: CAj j j j j j j



PSTONE CASES. j



Case 1. Eco-
j j



Products, Inc. Case 2. Spatial Tech
j j j j j



nology,

,Chapter 1 j




INTRODUCTIONjTOjFINANCEjFORjENTREPRENEURSj FOCUS

Thejpurposejofjthisjfirstjchapterjisjtojpresentjanjoverviewjofjwhatjentrepreneurialjfinancejisj about.jInjdoi
ngjsojwejhopejtojconveyjtojyoujthejimportancejofjunderstandingjandjapplyingj entrepreneurialjfinancej
methodsjandjtoolsjtojhelpjensurejanjentrepreneurialjventurejisj successful.Wejpresentjajlifejcyclejappro
achjtojthejteachingjofjentrepreneurialjfinancejwherej wejcoverjventurejoperatingjandjfinancialjdecision
sjfacedjbyjthejentrepreneurjasjajventurej progressesjfromjanjideajthroughjtojharvestingjthejventure.

LEARNINGjOBJECTIVES

LOj1.1:jCharacterizejthejentrepreneurialjprocess.
LOj1.2:jDescribejentrepreneurshipjandjsomejcharacteristicsjofjentrepreneurs.j LOj1.3:j
Indicatejseveraljmegatrendsjprovidingjwavesjofjentrepreneurialj opportunities.LOj1.
4:jListjandjdescribejthejsevenjprinciplesjofjentrepreneurialj finance.
LOj1.5:jDiscussjentrepreneurialjfinancejandjthejrolejofjthejfinancialj manager.LOj1.6:j
Describejthejvariousjstagesjofjajsuccessfuljventure‘sjlifej cycle.
LOj1.7:jIdentify,jbyjlifejcyclejstage,jthejrelevantjtypesjofjfinancingjandj investors.LOj1.
8:jUnderstandjthejlifejcyclejapproachjusedjinjthisjbook.

CHAPTERjOUTLINE

1.1 THEjENTREPRENEURIALjPROCESS
1.2 ENTREPRENEURSHIPjFUNDAMENTALS
A. WhojisjanjEntrepreneur?
B. BasicjDefinitions
C. EntrepreneurialjTraitsjorjCharacteristics
D. OpportunitiesjExistjButjNotjWithoutjRisks
1.3 SOURCESjOFjENTREPRENEURIALjOPPORTUNITIES
A. SocietaljChanges
B. DemographicjChanges
C. TechnologicaljChanges
D. EmergingjEconomiesjandjGlobaljChanges
E. Crisesjandj ―Bubbles‖
F. DisruptivejInnovation


1

, 1.4 PRINCIPLESjOFjENTREPRENEURIALjFINANCE
A. Real,jHuman,jandjFinancialjCapitaljmustjbejRentedjfromjOwnersj(Principlej#1)
B. RiskjandjExpectedjRewardjgojHandjinjHandj(Principlej#2)
C. WhilejAccountingjisjthejLanguagejofjBusiness,jCashjisjthejCurrencyj(Principlej#3)
D. NewjVenturejFinancingjInvolvesjSearch,jNegotiation,jandjPrivacyj(Principlej#4)
E. AjVenture‘sjFinancialjObjectivejisjtojIncreasejValuej(Principlej#5)
F. ItjisjDangerousjtojAssumejthatjPeoplejActjAgainstjTheirjOwnjSelf-
j Interests(Principlej#6)

G. VenturejCharacterjandjReputationjcanjbejAssetsjorjLiabilitiesj(Principlej#7)
1.5 ROLEjOFjENTREPRENEURIALjFINANCE
1.6 THEjSUCCESSFULjVENTUREjLIFEjCYCLE
A. DevelopmentjStage
B. StartupjStage
C. SurvivaljStage
D. Rapid-GrowthjStage
E. Early-MaturityjStage
F. LifejCyclejStagesjandjthejEntrepreneurialjProcess
1.7 FINANCINGjTHROUGHjTHEjVENTUREjLIFEjCYCLE
A. SeedjFinancing
B. StartupjFinancing
C. First-RoundjFinancing
D. Second-RoundjFinancing
E. MezzaninejFinancing
F. Liquidity-StagejFinancing
G. SeasonedjFinancing
1.8 LIFEjCYCLEjAPPROACHjFORjTEACHINGjENTREPRENEURIALjFINANCEj SUMMA
RY


DISCUSSIONjQUESTIONSjANDjANSWERS

1. Whatjisjthejentrepreneurialjprocess?

Thejentrepreneurialjprocessjcomprises:jdevelopingjopportunities,jgatheringjresources,j andmanagi
ngjandjbuildingjoperationsjwithjthejgoaljofjcreatingjvalue.

2. Whatjisjentrepreneurship?jWhatjarejsomejbasicjcharacteristicsjofjentrepreneurs?

Entrepreneurshipjisjthejprocessjofjchangingjideasjintojcommercialjopportunitiesjandj creatingvalue.jj
Whilejtherejisjnojprototypicaljentrepreneur,jmanyjarejgoodjatjrecognizingj commercialjopportuniti
es,jtendjtojbejoptimistic,jandjenvisionjajplanjforjthejfuture.

3. Whyjdojbusinessesjclosejorjceasejoperating?jWhatjarejthejprimaryjreasonsjwhyjbusinessesj fail?