Reference no: EM133230357
1. The minimum possible expenditure of capital and other resources in order to bring an entrepreneurial idea to market is known as leverage contingencies.
A. affordable loss.
B. bootstrapping.
C. lean business practices.
2. Your friend Sarah tells you she is thinking about buying the dog grooming business you both take your dogs to, as the owner just announced it was for sale. The groomer is always busy and it is best to have a standing monthly appointment, as the shop is often booked solid. The groomer is currently open limited hours as the owner is wishing to get out of the business, and Sarah thinks services (and profits) can be improved with longer hours. As Sarah's friend, what should your response be?
A. "It is very difficult to place a value on an existing company. How will you know if they are asking a fair price?"
B. "There may not be enough demand for dog grooming to keep the place open."
C. "Remember, you won't have any cash coming in initially, have you saved some money to live on?"
D. "You know, it is more expensive to buy an existing business, than it is to just start your own business."
3. The process of investigating a business to determine its value is called
A. caveat emptor.
B. bricolage.
C. heuristics.
D. due diligence.
4. One method of valuing an ongoing business is to use discounted cash flows, which are cash flows that have been reduced in value because they are to be received in the future.
A. true
B. false
5. Which of the following is the primary goal for performing due diligence?
A. finding any inefficiencies, unnoticed opportunities, waste, and mismanagement
B. conducting extensive interviews with the sellers of the business
C. identifying the potential competitors of the company
D. studying the competitive strategies of the company
6. A business that is created by separating parts of an operating business into a separate entity is called a
A. strategic partnership.
B. franchise.
C. spin-off.
D. buy-in.
7. Research into the indicators of successful start-ups shows that one of the best predictors of success is the level of
A. time committed to the new business by the founders.
B. demand for the new product or service.
C. funding obtained by the owners.
D. experience of the founders.
8. In many franchises the franchiser oversees (or even manages) the selection of location, the construction of facilities, the acquisition and installation of necessary equipment, and the initial inventory with which to open business. Which of the following terms best represents this type of franchising?
A. trade name
B. turnkey
C. business format
D. conversion
9. Trade name franchising provides an organization through which interdependent businesses may combine resources.
A. true
B. false
10. In a ________, the buyer seizes control of the business without the permission of all owner
A. takeover
B. buy-in
C. key resource acquisition
D. buyout
11. A start-up can be kept small deliberately to limit the magnitude of possible losses.
A. true
B. false
12. Which of the following terms best represents something a business owns that has economic value or is expected to have economic value in the future?
A. asset
B. revolving credit
C. cash flow
D. synergy