Chapter 8

Question 1

8.1 An entrepreneur’s ability to pursue an opportunity and turn it into a viable entrepreneurial firm hinges largely on _______.

Answer 1

the availability of money

Question 2

8.2 _______ is a firm’s ability to meet its short-term financial obligations.

Answer 2

Liquidity

Question 3

8.3 _______ depict relationships between items on a firm’s financial statements to help firms determine if they are meeting their financial objectives.

Answer 3

Financial Ratios

Question 4

8.4 Which of the following represents the final step in the financial management process?

Answer 4

Ongoing analysis of financial results

Question 5

8.5 _____ are projections for future periods based on forecasts.

Answer 5

Pro forma financial statements

Question 6

8.6 A(n) _______ is a snapshot of a company’s assets, liabilities, and owners’ equity at a specific point in time.

Answer 6

Balance Sheet

Question 7

8.7 Which of the following is like a month-end bank statement?

Statement of cash flows, Profit Margin, Assumption Sheet, Income Statement, Balance Sheet

Answer 7

Statement of cash flows

Question 8

8.8 The point at which total revenue equals total costs associated with the output or sale of a product is the ______.

Answer 8

break-even point

Question 9

8.9 A firm’s pro forma financial statements are similar to its historical financial statements except that the pro forma financial statements ______.

Answer 9

look forward rather than back in time

Question 10

8.10 Which pro forma financial statement best provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time?

Answer 10

Pro forma balance sheet