Week 4 exam
Financial Planning Mastery Quiz
Test your knowledge on financial planning and forecasting with our engaging quiz! This quiz is designed to assess your understanding of key concepts related to sales growth, sustainable finance, and the stages of venture capital.
Prepare to challenge yourself with questions covering:
- Long-term financial planning
- Sales forecasting methods
- Venture financing stages
- Angel investors and their roles
Long-term financial planning begins with a forecast of annual working capital needs.
True
False
Forecasting for firms with operating histories is generally much easier than forecasting for early-stage ventures.
True
False
A customer-driven or “bottom-up” approach to forecasting sales is used primarily to forecast industry sales growth rates.
True
False
Sales forecasting accuracy is usually highest during a venture’s startup stage in its life cycle.
True
False
Sales forecasting accuracy is usually lowest during a venture’s development stage in its life cycle.
True
False
The rate at which a firm can grow sales based on the retention of business profits is known as sustainable sales growth rate.
True
False
A firm’s maximum sustainable sales growth rate occurs at a retention ratio of 100%.
True
False
Additional funds needed” (AFN) is the gap remaining between the financial capital needed and that funded by spontaneously generated funds and retained earnings.
True
False
Increases in accounts receivable and accounts payable that accompany sales increases are called “spontaneously generated funds”.
True
False
The percent of sales forecasting method must project all cost and balance sheet items at the same growth rate as sales.
True
False
The “constant-ratio forecasting method” is a variant of the “percent-of- sales forecasting method.”
True
False
Preparing a projected statement of cash flows serves as check on the projected income statement and projected balance sheet.
True
False
A firm projects net income to be $500,000, intends to pay out $125,000 in dividends, and had $2 million of equity at the beginning of the year. The firm’s sustainable growth rate is:
5%
18.75%
6.25%
4.69%
None of the above
A sales growth rate based on the retention of profits is referred to as the:
Real sales growth rate
Sustainable sales growth rate
Spontaneous sales growth rate
Nominal sales growth rate
Weighted average sales growth rate
Use the following information to estimate a venture’s sustainable growth rate: Net income = $200,000; Total assets = $1,000,000; equity multiple based on beginning common equity = 2.0 times; and Retention rate = 25%.
50%
25%
20%
10%
5%
A venture’s common equity was $50,000 at the end of last year. If the venture’s common equity at the end of this year was $60,000, what was its sustainable sales growth rate?
5%
10%
15%
20%
25%
Determine a firm’s “financial policy” multiplier based on the following information: sustainable growth rate = 20%; net profit margin = 10%; and asset turnover = 2 times.
1.00
1.25
1.50
1.75
2.00
The financial funds still needed to finance asset growth after using spontaneously generated funds and any increase in retained earnings is called:
Spontaneously generated funds
Additional funds needed
Addition in retained earnings
Financial capital needed
Which of the following is a forecasting method used to project financial statements?
Percent-of-sales method
Percent-of-expenses method
GNP-ratio method
A and b
A, b, and c
Early-stage ventures include firms in their development, startup, or survival live cycle stages.
True
False
Business angels are wealthy individuals acting as informal or private investors, who provide venture financing for small businesses.
True
False
Mezzanine financing is temporary financing needed to keep the venture afloat until the next offering.
True
False
One principal of entrepreneurial finance is “risk and expected reward go hand in hand.
True
False
Financial bootstrapping maximizes the need for financial capital.
True
False
Business angels are wealthy individuals who invest in early-stage ventures in exchange for the excitement of launching the business, as well as a share of the firm’s financial gains.
True
False
The type of financing that occurs during the survival stage of a venture’s life cycle is typically referred to as the:
Seed financing
Startup financing
First round financing
Second round financing
Mezzanine financing
Which one of the following would not be considered a type of venture financing?
Seed financing
Startup financing
Mezzanine financing
Liquidity-stage financing
Seasoned financing
Financial markets where customised contracts or securities are negotiated, created, and held with restrictions on how they can be transferred are called:
Private financial markets
Public financial markets
Domestic financial markets
International financial markets
All of the above
Which of the following are not sources of seed and start-up financing?
Family and friends
The entrepreneur’s physical and financial assets
Business angels
Venture capitalists
Stock and bond markets
Wealthy individuals who invest in early stage ventures in exchange for the excitement of launching a business and a share in any financial rewards are known as:
Creditors
White knights
Corporate raiders
Business angels
Stakeholders
Business angels typically initiate their investments during the:
Early stages of a venture’s life-cycle
Middle stages of a venture’s life-cycle
Maturity stage of a venture’s life-cycle
All of the above
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