presentation material

Question 1

six fondamental traits

Answer 1

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

Question 2

outside investors

Answer 2

Love Money/FFF (Family, Friends, Fouls)
Angel/Private Investors
Government Agencies
Venture Capitalists

Question 3

financial statements

Answer 3

Balance Sheet
Income Statement
Cash Flow Statement

Question 4

life-cylce

Answer 4

Nascent
Start-up
High-growth
Maturity
Stability
Resurgence or Decline

Question 5

cost per acquisition

Answer 5

= Total Website cost / # of new customers

Question 6

conversion (browse-to-buy) rate

Answer 6

= # of customers who make purchase / total # of visitors to Website. Average is 2.5%;

Question 7

cart abandonment rate

Answer 7

= 1 - (# of customers who complete transaction / # of shoppers who place at least one item in cart but who abandon the final transaction)

Question 8

initial public offering

Answer 8

a company’s flotation on the stock exchange

Question 9

entrepreneurial financing principles

Answer 9

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

Question 10

debt

Answer 10

something, typically money, that is owed or due.

Question 11

equity

Answer 11

the value of the shares issued by a company

Question 12

equity financing

Answer 12

the method of raising capital by selling company stock to investors. In return for the investment, the shareholders receive ownership interests in the company.

Question 13

initial public offering

Answer 13

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.

Question 14

balance sheet

Answer 14

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.

Question 15

income statment

Answer 15

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

Question 16

cash flow statement

Answer 16

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

Question 17

equity debt

Answer 17

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

Question 18

debt capital

Answer 18

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.

Question 19

tripple “F”

Answer 19

‘love money’ Less complicated technically, but fraught with emotion. Not usually professional, easily discounted (14% default rate). It should be strictly business.
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Question 20

angle investors

Answer 20

seasoned in industry. Invest in an earlier stage of development before indicators positive. Willing to take the bigger risk if opportunity spotted.
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Question 21

bank loan

Answer 21

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

Question 22

corporation financing

Answer 22

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’
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Question 23

pro forma (projected) financial statements

Answer 23

financial statement is one based on certain assumptions and projections
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Question 24

require pro forma inventory

Answer 24

Average Inventory Turnover = COGS/average inventory level

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Question 25

average inventory turnover

Answer 25

measures how often average inventory is used per fiscal year

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Question 26

average payable period

Answer 26

The ratio measures how long it takes to pay up.

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Question 27

float

Answer 27

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
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Question 28

four cs + importance of each

Answer 28

capacity,
collateral,
character,
conditions.

Question 29

cash flow

Answer 29

measure of volume of dollars that comes into and goes out of a business during accounting period.
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Question 30

optimal cash conversion cycle

Answer 30

inventory turnover in days + A/R turnover in days - A/R turnover in days. If negative, working well

Question 31

harvest

Answer 31

'Capital cow' (force diversity);
Employee stock ownership plan;
Management buyout (MBO or LBO);
Merger, acquisition, strategic alliance;
Public offering;
Sale