presentation material Flashcards
six fondamental traits
Commitment and determination; Leadership (internal locus of control); Opportunity obsessed; Higher tolerance for risk, uncertainty; Adaptable, self-reliant, and resilient; Motivated to excel - personal achievement
outside investors
Love Money/FFF (Family, Friends, Fouls)
Angel/Private Investors
Government Agencies
Venture Capitalists
financial statements
Balance Sheet
Income Statement
Cash Flow Statement
life-cylce
Nascent Start-up High-growth Maturity Stability Resurgence or Decline
cost per acquisition
= Total Website cost / # of new customers
conversion (browse-to-buy) rate
= # of customers who make purchase / total # of visitors to Website. Average is 2.5%;
cart abandonment rate
= 1 - (# of customers who complete transaction / # of shoppers who place at least one item in cart but who abandon the final transaction)
initial public offering
a company’s flotation on the stock exchange
entrepreneurial financing principles
More cash is preferred to less cash
Cash coming sooner is preferred to cash coming later
Less risky cash is better than more risky variety
debt
something, typically money, that is owed or due.
equity
the value of the shares issued by a company
equity financing
the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.
initial public offering
Selling percentage of shares too few investors in the closed market; or placing shares in stock-market and allow the market to determine price, thus valuation.
balance sheet
a statement of the assets, liabilities, and capital of a business or other organization at a particular point in time, detailing the balance of income and expenditure over the preceding period.
income statment
A financial statement that reports a company’s financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities
cash flow statement
statement of cash flows, is a financial statement that shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities
equity debt
also termed ‘risk capital’ as gain/loss is proportional to a percentage of ownership
Benefits: capital not paid back directly; investors share in earnings and have some say.
Downside: loss of ownership
debt capital
is borrowing with the intent of repaying in full with interest within a specified maturity date.
Benefits are that both sides can calculate the cost.
More lenders than investors, in part because of risk-return trade-off (higher risk = higher returns demanded). More security in lending.
tripple “F”
‘love money’ Less complicated technically, but fraught with emotion. Not usually professional, easily discounted (14% default rate). It should be strictly business.
angle investors
seasoned in industry. Invest in an earlier stage of development before indicators positive. Willing to take the bigger risk if opportunity spotted.
bank loan
short often termed bridging, operational, working loan. If trust, line of credit extended - should not be revolving, zero balance
Longer-term are secured by collateral and used for plant expansion, capital equipment, real estate, construction
corporation financing
Big firms interested in obtaining higher financial returns and satisfying strategic needs. Advantageous for smaller firms with technology or knowledge transfer, marketing assistance, distribution channels … Leads to ‘market validation’
pro forma (projected) financial statements
financial statement is one based on certain assumptions and projections
require pro forma inventory
Average Inventory Turnover = COGS/average inventory level
average inventory turnover
measures how often average inventory is used per fiscal year
average payable period
The ratio measures how long it takes to pay up.
float
is the difference between days payables outstanding and days sales outstanding. Negative is common, but it means firm is indirectly supporting its customers which will have an adverse impact on cash flow
four cs + importance of each
capacity,
collateral,
character,
conditions.
cash flow
measure of volume of dollars that comes into and goes out of a business during accounting period.
optimal cash conversion cycle
inventory turnover in days + A/R turnover in days - A/R turnover in days. If negative, working well
harvest
'Capital cow' (force diversity); Employee stock ownership plan; Management buyout (MBO or LBO); Merger, acquisition, strategic alliance; Public offering; Sale
