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

SOLUTION MANUAL ForEntrepreneurialFinance, 7th Edition
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by J. Chris Leach, Ronald W. Melicher, Chapters 1 - 16,
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g Complete With CAPSTONE CASES
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,TABLE OFCONTENTS g g g




Part 1: THE ENTREPRENEURIAL ENVIRONMENT.
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1. Introduction to g g




g FinanceforEntrepreneurs. g g




2. Developing the Business Idea. g g g




Part 2: ORGANIZING AND OPERATING THE VENTURE.
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3. OrganizingandFinancing aNewVenture. g g g g g




4. Preparing and Using Financial Statements. g g g g




5. Evaluating Operating and Financial Performance. g g g g




Part 3: PLANNING FOR THE FUTURE.
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6. Managing Cash Flow. g g




7. Typesand CostsofFinancialCapital.
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8. SecuritiesLawConsiderationsWhenObtainingVentureFinancing. g g g g g g




Part 4: CREATING AND RECOGNIZING VENTURE VALUE.
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9. Projecting Financial Statements. g g




10. Valuing Early-Stage Ventures. g g




11. Venture Capital Valuation Methods. g g g




Part 5: STRUCTURING FINANCING FOR THE GROWING VENTURE.
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12. Professional Venture Capital. g g




13. Other Financing Alternatives. g g




14. SecurityStructuresandDeterminingEnterpriseValues. g g g g g




Part 6: EXIT AND TURNAROUND STRATEGIES.
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15. HarvestingtheBusinessVentureInvestment. g g g g




16. Financially Troubled Ventures: Turnaround Opportunities? g g g g




Part 7: CAPSTONE CASES.
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Case 1. Eco-Products, Inc.
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g Case2.SpatialTechnology,
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,Chapter 1 g




INTRODUCTION TO FINANCE FOR ENTREPRENEURS g g g g




FOCUS
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The purpose of this first chapter is to present an overview of what entrepreneurial finance is about. In doing so we
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hope to convey to you the importance of understanding and applying entrepreneurial finance methods and tools
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to help ensure an entrepreneurial venture is successful.We present a life cycle approach to the teaching of
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entrepreneurial finance where we cover venture operating and financial decisions faced by theentrepreneur as a
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ventureprogresses from an idea through to harvestingtheventure.
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LEARNING OBJECTIVES g




LO 1.1: Characterize the entrepreneurial process.
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LO 1.2: Describe entrepreneurship and some characteristics of entrepreneurs.
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LO 1.3: Indicate several megatrends providing waves of entrepreneurial opportunities.LO 1.4: List
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and describe the seven principles of entrepreneurial finance.
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LO 1.5: Discuss entrepreneurial finance and the role of the financial manager.LO 1.6: Describe
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the various stages of a successful venture‘s life cycle.
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LO 1.7: Identify, by life cycle stage, the relevant types of financing and investors.LO 1.8: Understand
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thelife cycle approach used in this book.
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CHAPTER OUTLINE g




16.1 THE ENTREPRENEURIAL PROCESS g g




16.2 ENTREPRENEURSHIP FUNDAMENTALS g




A. Who is an Entrepreneur? g g g




B. Basic Definitions g




C. Entrepreneurial Traits or Characteristics g g g




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




16.3 SOURCES OF ENTREPRENEURIAL OPPORTUNITIES g g g




A. Societal Changes g




B. Demographic Changes g




C. Technological Changes g




D. Emerging Economies and Global Changes g g g g




E. Crises and ―Bubbles‖ g g




F. Disruptive Innovation g




1

, 16.4 PRINCIPLES OF ENTREPRENEURIAL FINANCE g g g




A. Real, Human, and Financial Capital must be Rented from Owners (Principle #1)
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B. Risk andExpected Reward go Handin Hand (Principle #2)
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C. While Accounting is the Language of Business, Cash is the Currency (Principle #3)
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D. New Venture Financing Involves Search, Negotiation, and Privacy (Principle #4)
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E. A Venture‘s Financial Objective is to Increase Value (Principle #5)
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F. It is Dangerous to Assume that People Act Against Their Own Self-Interests
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(Principle #6) g g




G. Venture Character and Reputation can be Assets or Liabilities (Principle #7)
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16.5 ROLE OF ENTREPRENEURIAL FINANCEg g g




16.6 THE SUCCESSFUL VENTURE LIFE CYCLE
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A. Development Stage g




B. Startup Stage g




C. Survival Stage g




D. Rapid-Growth Stage g




E. Early-Maturity Stage g




F. Life Cycle Stages and the Entrepreneurial Process
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16.7 FINANCING THROUGH THE VENTURE LIFE CYCLE g g g g g




A. Seed Financing g




B. Startup Financing g




C. First-Round Financing g




D. Second-Round Financing g




E. Mezzanine Financing g




F. Liquidity-Stage Financing g




G. Seasoned Financing g




16.8 LIFE CYCLE APPROACH FOR TEACHING ENTREPRENEURIAL FINANCE
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SUMMARY
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DISCUSSION QUESTIONS AND ANSWERS g g g




1. What is the entrepreneurial process?
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The entrepreneurial process comprises: developing opportunities, gathering resources, and
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managing and building operations with the goal of creating value.
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2. What is entrepreneurship? What are some basic characteristics of entrepreneurs?
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Entrepreneurship is the process of changing ideas into commercial opportunities and creatingvalue. While
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there is no prototypical entrepreneur, many are good at recognizing commercial opportunities, tend to be
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optimistic, and envision aplan forthefuture.
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3. Why do businesses close or cease operating? What are the primary reasons why businessesfail?
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