Review and Answer Questions
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Section or Module: ENTR 5000 Entrepreneurship Process for Freeman at WU
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In the Textbook:
- Chapter 6: Financial Statements
- Chapter 7: Profit, Profitability, and Break-Even Analysis
- Chapter 8: Forecasting and Pro Forma Financial Statements | Slides
- Chapter 9: Getting Financing or Funding | Slides
Question 1.
Financial Management, Planning and Analysis
Complete the following Review and Discussion Questions (four total) from each of the textbook sections indicated.
Chapter 6, Financial Statements, p. 234
2. Compare variable and fixed expenses.
6. What is the difference between between the time periods listed on an income statement and on a balance sheet?
Chapter 7, Profit, Profitability, and Break-Even Analysis, p. 263
10. The Handy Doll Manufacturing Company has the following information: The average doll sales price is $12, raw materials for a doll are $4, and it takes 15 minutes to assemble a doll. Production labor is paid $8 per hour. Operating expenses are as follows: salaries, $2,500 per week; insurance, $1,200 per quarter; rent, $1,500 per month; and utilities, $800 per month. How many dolls must be sold per month to break-even? How many dollars in sales does this represent? What is the contribution margin for each doll sold?
Chapter 8, Forecasting and Pro Forma Financial Statements, p. 309
8. What role does the pro forma cash budget play in financial forecasting (Table 8)?
Question 2.
Financing and Funding
Complete the following Review Questions (five total) on pages 357-358 of Chapter 9, Getting Financing or Funding in your textbook.
1. What are the three most common reasons most entrepreneurial ventures need to raise money in their early life?
5. What is bootstrapping? Provide several examples of how entrepreneurs bootstrap to raise money or cut costs. In your judgement, how important is the art of bootstrapping for for an entrepreneurial venture?
8. What are the most common sources of equity funding?
9. Describe the most common sources of debt financing.
18. In general, why are commercial banks reluctant to loan money to start-ups?
