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FIN 317 Midterm Exam (90/90 Points)

1. The type of financing that occurs during the development stage of a venture’s life cycle is typically referred to as:
2. Which one of the following possible conflicts of interest is usually minimized through the use of equity incentives?
3. The first three stages of a successful venture’s life cycle occur in the following order:
4. Mezzanine financing is associated with which one of the following life cycle stages:
5. One study of successful entrepreneurs indicated that a majority felt that the most important factor in the long-term success of their ventures was:
6. Determine gross profit of a venture with the following financial information: cost of goods sold = $30,000; net profit = $17,000; asset turnover = 1.6; return on assets 32%
7. In the venture life cycle, moving from the development stage to the startup stage frequently begins with the preparation of a business plan. The business plan is a written document that describes the proposed venture in all of the following terms except:
8. A “score” in the range of 2.34-3.00 using the VOS Indicator TM would be considered a:
9. A sound business model includes a plan to:
10. At the end of a qualitative-based venture opportunity screening exercise, the interviewer prepares a subjective assessment and indicates one of the following:
11. The rules and procedures established to govern the corporation are called the
12. Which form of business organization is characterized by having the shortest start-up time and lowest legal costs?
13. In a general partnership, legal action that treats all partners equally as a group is called:
14. Based on 2009 tax schedules, the first dollar of corporate income is taxed at which of the following marginal tax rates:
15. Certification marks are typically used to:
16. Acme Pest Control has sales of $13,500, cost of goods sold of $4,000, selling expenses of $3,500, depreciation of $2,000, interest expense of $2,000, and a tax rate of 34%.
17. Cash includes all of the following except:
18. Expenses or costs that vary directly with revenues are said to be:
19. Which of the following is not a category on the statement of cash flows?
20. Your venture has total assets of $690, net fixed assets of $500, long-term debt of $80, and stockholders’ equity of $400. What is the amount of your venture’s current liabilities?
21. The difference between a venture’s ability to generate cash to pay interest and the amount of interest it has to pay is determined by which of the following ratios?
22. Use the following information to determine a firm’s “cash build:” net sales = $150,000; net income = $15,000; beginning-of-period accounts receivable = $60,000; end-of-period accounts receivable = $90,000; and interest = $10,000
23. Which of the following is not part of the operating cycle?
24. Based on the following information, determine the venture’s cash conversion cycle: Inventory-to-sale conversion period = 112.9 days; Sale-to-cash conversion period= 57.1 days; and Purchase-to-payment conversion period = 76.8 days.
25. investment bankers and commercial banks are important users of financial ratios and measures during which of the following life cycle stages?
26. If a venture has a return on assets (ROA) = 12%, an equity multiplier based on beginning equity = 3.0 times, and a sustainable growth rate of 18%, the retention rate would be:
27. Which one of the following life cycle stages would generally be associated with the second-lowest sales forecasting accuracy?
28. Which of the following is not a step in forecasting sales for a seasoned firm?
29. The financial funds needed to acquire assets necessary to support a firm’s sales growth is called:
30. Determine a venture’s sustainable growth rate based on the following information: sales = $1,000,000; net income = $100,000; common equity at the beginning of the year = $500,000; and retention rate = 50%.