Chapter 6 (missing #12)
B. Stand retailing
C. Starting a new business
D. Buying an existing business
B. cash purchases
D. leveraged buyouts
A. the use of the most up-to-date technologies.
B. the access to revolving credit line.
C. it can be kept small deliberately to limit the magnitude of possible losses.
D. it has a clean slate.
A. It begins with a clean slate
B. Absence of “legacy” locations, buildings, and equipment
C. Absence of initial name recognition
D. Providing new products or services
B. Revolving credit
C. Cash flow
D. nonrevolving credit
A. business incubator
B. trade association
C. venture capital firm
A. mentoring programs
B. trade associations
C. business incubators
A. the business is critically examined by outsiders.
B. it brings the synergy from multiple founders.
C. the business produces a product or service for which there is a proven demand.
D. the founders take part in the mentoring program.
A. Banks prefer partnered start-ups.
B. Federal government provides subsidies to partnering situations.
C. Partners may provide capital, equipment, or advice.
D. Partners eliminate the need to hire other employees.
A. It is easy to find an appropriate existing business for sale given the technology today.
B. Purchasing a business often requires less cash outlay than for creating a start-up.
C. Existing managers and employees embrace change due to continuing operations that provide job security.
D. New technology needs are eliminated.
A. Established customers leaving due to change.
B. Existing business processes being difficult to change.
C. Purchasing a business being significantly more expensive than a start-up.
D. Existing managers and employees resisting change.
A. Conducting extensive interviews with the sellers of the business.
B. Making a personal examination of the site (or sites) of the business.
C. Interviewing customers and suppliers of the business.
D. Developing a brief business plan for the acquisition.
A. balance sheet.
B. mission statement analysis.
C. income statement.
D. statement of cash flows.
A. Discounted cash flow
B. Replacement value cash flow
C. Free cash flow
D. Book value cash flow
A. Estimates do not consider the value of an ongoing firm over the value of its identifiable assets.
B. They are based on the assumption that a business is worth the value of its assets minus the value of any liabilities.
C. It is very difficult and time consuming to separately identify and estimate the values of all the assets of a business.
D. The application of asset valuation methods to business valuation is similar to having an annuity.
A. the original cost of an asset might bear no relation to its current value.
B. depreciation is an arbitrary, but nonsystematic, method of transferring asset value to expense.
C. internally developed assets, such as patents, trademarks, and trade secrets do not have book value.
D. Depreciation makes no attempt to measure actual loss of value of an asset.
A. un-appropriated profit.
B. accumulated earnings.
C. retained earnings.
D. the earnings multiple.
C. Book values
A. The agreement does not require the franchisee to pay a fee for the right to enter into the business.
B. The agreement grants the franchisee use of a brand name, trademark, service mark, logo, or other commercial symbol which designates the franchisee as an affiliate of the franchisor.
C. The agreement provides that the franchisee may engage in business using a marketing plan or system provided by the franchisor or proposed by the franchisee.
D. The agreement provides the franchisee with a legal right to engage in the business of offering, selling, or distributing goods or services.
A. being certain that all family members know and accept that they are not forced to enter the management of the business if they don’t want to.
B. providing each member of the family business with the opportunity to obtain education and experience outside the business.
C. allowing each family member who does wish to enter the business to find out and do those functions and activities that he or she does best.
D. assuming that the leadership of the business must come from within the family.
A. buying a business.
C. consignment business.
D. starting a new business.
A. Initial name recognition
B. Clean slate
C. “Legacy” locations, buildings, and equipment
D. Accessibility to experienced managers and workers
A. Getting a mentor
B. Securing outside investment
C. Building trust in her “story”
D. Starting her business without any other founders to avoid conflict
A. Difficulty in determining the worth of the business.
B. Possibility of established customers leaving due to change.
C. Difficulty in changing existing business processes.
D. Buying a business being more expensive than starting one.
A. It is probably expensive and not profitable.
B. You give up control of marketing and operations.
C. You compete with the franchise company itself.
D. You receive no training and
A. obtaining and maintaining mentoring relationships.
B. obtaining and maintaining sufficient cash.
C. hiring and retaining qualified employees.
D. procuring enough inventory for sale.
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