Create a sales forecast, Bill and Henry are discussing the

Create a sales forecast

Reference no: EM132447530

Question 1: The first step in creating the pro forma income statement is to:

create a sales forecast.
determine a reasonable salary and return on investment in the company.
find published figures on the specific type of business in order to forecast sales.
figure out operating costs and make a realistic sales estimate.

Question 2

________ ratios help a business owner evaluate the company's performance and indicate how effectively the business employs its resources.

Liquidity
Leverage
Operating
Profitability

Question 3

The ________ ratio is a conservative measure of a firm's liquidity and shows the extent to which a firm's most liquid assets cover its current liabilities.

current
quick
turnover
net profit

Question 4

Depreciation is:

the difference between the total sources available to the owner and the total uses of those assets.
listed as a source of funds because it is a noncash expense, deducted as a cost of doing business.
the owner's total investment at the company's inception plus retained earnings.
creditors' total claims against the firm's assets.

Question 5

________ are those items of value the business owns; ________ are those things the business owes.

Assets; liabilities
Liabilities; assets
Ratios; equities
Equities; liabilities

Question 6

Once a credit account becomes past due, a small business owner should:

wait patiently; the customer will most likely pay the bill sooner or later.
turn the account over to a collection agency the day it becomes past due.
contact the customer immediately, ask for full payment, and set a deadline.
call the "deadbeat" in the middle of the night and make harassing and threatening remarks until he pays.

Question 7

Small businesses selling on credit find that:
it is relatively inexpensive and simple.
it is expensive and requires a great deal of effort.
it is essentially borrowing money from the customer.
many can get by without selling on credit because their business customers don't expect to use credit.

Question 8

Bill and Henry are discussing the volume of cash that has been coming into and going out of their business during the accounting period. They are discussing:

profit.
net income.
accounts receivable and payable.
cash flow.

Question 9

When creating the cash budget, keep in mind that:

it should be a monthly plan, projected out for 3 years.
the more variable the sales pattern, the shorter the planning horizon should be.
it should be quarterly estimates for a period of 1 year.
is a verbal or mental "document" in order to permit maximum flexibility.

Question 10

Marking down inventory items that don't sell will result in:

keeping the inventory lean.
reduction in inventory turn over ratio.
paying expenses on time.
All of the above

Question 11

Tien is looking for capital to purchase new buildings and equipment for her small manufacturing company. Tien is looking for ________ capital.

working
fixed
growth
asset-based

Question 12

When looking for an angel, the key is:

networking.
using the SBA as a contact point.
searching the web.
using business incubators' computer matching services.

Question 13

The most common source of equity funds used to start a small business is:

private investors or "angels."
loans from commercial banks.
the entrepreneur's pool of personal savings.
public stock issues.

Reference no: EM132447530

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