A security agreement is a contract in which a business selling an asset on credit gets a
security interest in that asset, protecting its legal rights in case the buyer fails to pay.
When investing surplus cash, the small business owner should seek the highest returns
possible on the money.
The net-sales-to-total assets ratio is also referred to as the total asset turnover.
Small businesses actually create more jobs than the number of jobs big businesses
create.
The best way to find out what customers really want and value is to ask them.
The conversion ratio, or browse-to-buy ratio is the proportion of visitors to a site who
visit, but do not actually make a purchase.
A product or service feasibility analysis determines the degree to which a product or
service idea appeals to potential customers and identifies the necessary resources.
Cash and quantity discounts allow business owners to receive a price break in the goods
they purchase.
The average inventory turnover ratio measures the number of times a company’s
inventory is sold out during the accounting period.
An entrepreneur considering two sites for a men and boys shop determines that she/he
needs sales of $158 per square foot to be profitable. Site #1 has 13,500 potential
customers who spend an average of $160.20 per year on men and boys wear. Two
competitors occupy 14,200 square feet of space. Site #2 has 10,800 potential customers
who spend an average of $152.10 per year on men and boys wear. One competitor has
10,000 square feet.
The index of retail saturation for site #2 is $________.
A) 164.27
B) 140.83
C) 170.64
D) 146.30
Macy’s buys white, pinpoint oxford blouses at $14 each and sells them at $30 each.
Macy’s percentage (of cost) markup is ________ percent.
A) 46.7
B) 87.5
C) 53.3
D) 114.3
Popular social media tools for small businesses include ________.
A) social networking
B) online videos
C) Webcasts
D) All the above
A ________ is the process by which a company determines the duties and the nature of
the jobs to be filled and the skills and experience required of the people who are to fill
them.
A) job analysis
B) job description
C) job specification
D) management audit
The most common reasons owners of small- and medium-sized businesses give for
selling their businesses are ________.
A) need for money and low return on investment
B) boredom and burnout
C) low return on investment and burnout
D) greater opportunities working for someone else and low return on investment
When evaluating a company as a potential investment target, venture capitalists look for
all but which of the following?
A) A competent management team
B) Potential for high returns
C) Convenient and profitable exit strategy
D) Stable industry
Foreign licensing has its greatest potential in the licensing of ________.
A) products
B) intangibles (e.g., technology, copyrights, and trademarks).
C) goods
D) franchises
The ________ the leverage suppliers of key raw materials or components have, the
________ attractive is the industry.
A) greater; more
B) more; more
C) greater; less
D) less; less
Factors such as ________ should be sought out in the selection of retail and service
business locations.
A) the lowest possible rent/lease options, transportation network, adequate parking,
physical and psychological barriers
B) modest customer traffic, transportation network, lack of parking, physical and
psychological barriers
C) customer traffic, transportation network, adequate parking, physical and
psychological barriers
D) customer traffic, isolation from other stores, adequate parking, physical and
psychological barriers
________ is a branch of philosophy that studies and creates theories about the basic
nature of right and wrong, duty, obligation, and virtue.
A) Semantics
B) Ethics
C) Religion
D) History
The ________ ratio tells how many times the company’s earnings cover the interest
payments on the debt it is carrying.
A) debt
B) debt-to-net worth
C) times-interest-earned
D) net sales-to-working capital
Refer to the following break-even chart to answer the question(s) below:
Line T is the ________ line, while line S is the ________ line.
A) total revenue; total expense
B) total expense; total revenue
C) fixed cost; variable cost
D) variable cost; fixed cost
The best companies seek to go beyond customer satisfaction, striving for customer
________.
A) automation
B) aggrandizement
C) apprehension
D) astonishment
________ is/are a method of financing frequently used by retailers of “big ticket items”
such as autos.
A) Discounted installment contracts
B) Trade credit
C) Installment loans
D) Floor planning
The first step an entrepreneur should take when buying an existing business is to
________.
A) explore financing options
B) prepare a list of potential candidates
C) analyze his or her skills, abilities, and interests in an honest self-audit
D) contact existing business owners in the area and ask if their companies are for sale
To protect patent claims, an inventor should be able to verify and document the
________.
A) research conducted to create the invention
B) fact that the invention was created in another country
C) date on which the idea was first conceived
D) initial sales of the invention
________ is a process in which a small group of people interacts to produce a large
quantity of imaginative ideas.
A) Groupthink
B) Mind-mapping
C) Brainstorming
D) Prototyping
Small companies that have expanded successfully into foreign markets tend to rely on
all but which of the following strategies?
A) Research foreign markets thoroughly.
B) Focus on many countries initially.
C) Utilize government resources designed to help small companies establish an
international presence.
D) Forge alliances with local partners.
Research shows that anyone can learn to be creative. The problem is ________.
A) many organizations fail to foster an environment that encourages creativity
B) most people never tap into their pools of innate creativity
C) most people have never been taught to be creative
D) All of the above
To reach profit objectives, entrepreneurs must be aware of their firms’ ________.
A) current ratio and liabilities
B) fixed assets and owner’s equity
C) assets and liabilities
D) overall financial position and any changes in the financial status