The gross profit margin is calculated by dividing net income by net sales revenue.
Franchisors are obligated to renew a franchisee’s contract unless there has been
malfeasance on the part of the franchise.
Research has isolated a set of characteristics that can predict who will succeed as an
entrepreneur.
Going global can lower manufacturing costs.
A benefit is a descriptive fact about a product or service.
Innovation should be an intermittent process because good ideas don’t come often.
One effective technique for improving cash management is to establish a firm credit
policy in writing and let customers know in advance what it is.
The quality of the entrepreneur’s business plan has little impact on the first impression
potential lenders and investors have of the company.
The purpose of the road show coordinated by the underwriter of an initial public
offering (IPO) is to promote interest in the IPO among potential syndicate members.
The radical change involved in JIT II is that suppliers’ employees work onsite with the
customer’s plant and there is a sharing of what is normally confidential information.
Net profit on sales ratio = Net sales / Net income.
Studies indicate that the opportunity to make a difference is a significant benefit in the
eyes of most entrepreneurs.
It is important during the job interview to get the candidate to discuss actual situations
in which he/she has used the skill or knowledge you are seeking.
A bypass trust allows the business owner to keep life insurance proceeds out of his/her
estate as long as the owner doesn’t die within three years of establishing the trust.
When a manager receives a complaint about sexual harassment, his/her first step should
be to keep the complaint casual and urge the complainant to return to the alleged
harasser her/himself and deal with the issue that way first.
ABC inventory systems are designed to maintain a running count of the items in
inventory.
Some credit unions are now extending personal loans to members, often without
personal collateral, in order to start a business.
The policies and procedures concerning ethical behavior in an organization serve as
specific guidelines for people as they make daily decisions.
Even though large companies must view themselves as “global companies” if they are
to succeed, small companies cannot because they have a significant competitive
disadvantage in the global environment.
Right-brain people challenge custom, routine, and tradition.
Choosing the “right” joint venture partner is crucial to its ultimate success.
A differentiation strategy works well when buyers are sensitive to price changes, when
competing firms sell the same commodity products, and when companies can benefit
from economies of scale.
Franchising, as a method of conducting business, has declined in importance in the past
five years in international markets.
Franchising benefits the franchisor by providing a quick way to expand the distribution
system and a way to grow without the cost and effort to develop managers internally.
While corporate culture influences employees’ ethical decisions, managers have little
impact on those decisions.
Most venture capitalist companies prefer to finance start-up companies to maximize
their return.
In an ABC inventory system, approximately 50% of the inventory usually is counted as
C category items.
A break-even analysis has several drawbacks including the fact that it ignores the
importance of cash flows and that its accuracy is dependent on the accuracy of revenue
and expense estimates.
One important characteristic of successful “copreneurs” is their ability to separate their
business life from their personal life, so that one doesn’t consume the other.
Surprisingly, kleptomaniacs account for nearly 9% of all small business retail losses.
Essential pieces of information for potential investors and lenders are the assumptions
the entrepreneur used to derive forecasts, projections, etc.
Effective drug prevention programs use random drug tests of employees and keep their
drug policies unwritten for maximum flexibility.
Cash discounts are offered to customers as an incentive to pay for merchandise
promptly.
The buyer of the business wants to minimize the cash up front and avoid enabling the
seller to open a competing business.
Common bases for a focus strategy include superior customer service, specialproduct
features, complete product lines, instantaneous parts availability, absolute product
reliability, supreme product quality, and extensive product knowledge.
Owners do not need to prosecute juvenile shoplifters when they are caught, as the scare
of getting caught is often enough to make them stop.
A loan from a stockbroker, based on the stocks and bonds in the customer’s portfolio:
A) tends to be at a higher rate than a bank but easier to obtain.
B) can be “called” for payment in a matter of hours or days.
C) is for a maximum of $50,000.
D) has a fixed repayment schedule and must be paid within 90 days.
“F.O.B. seller” means that:
A) title passes to the buyer when the seller delivers the goods to the buyer.
B) risk of loss transfers to the buyer when the seller delivers the goods to the carrier.
C) the seller pays all shipping and transportation costs.
D) the buyer has both title and risk of loss as soon as the goods are paid for, regardless
of their physical location.
Entrepreneurs can trim costs by:
A) avoiding nonessential outlay.
B) looking for simple ways to cut costs.
C) establishing an internal security and control system.
D) All of the above
A firm whose sales fluctuate widely over a relatively short time might require a
________ cash budget.
A) weekly
B) monthly
C) quarterly
D) biweekly
Another word for browse-to-buy is:
A) conversion.
B) controller.
C) tracker.
D) browse-to-purchase.
Shifting patterns in the age, income, education, race, and other characteristics of the
population are the subject of ________ and exert a potent force on a company’s
marketing plan.
A) psychographics
B) geographics
C) demographics
D) geo-demographics
The Truth-In-Lending Act:
A) applies to all installment contracts with more than two payments.
B) prohibits discrimination in granting credit.
C) requires a lender to disclose the total cost of credit or a loan.
D) prohibits certain behavior on the part of a lender when trying to collect bad debts.
One of the reasons for the significant drop in the number of public offerings since 2001
is:
A) the dot-com crash of 2000.
B) the U.S. economic crisis.
C) the global economic meltdown.
D) lack of available float.
TCM is the acronym for:
A) total customer management.
B) time compression management.
C) total customer marketing.
D) total compression management.
An embargo is:
A) a duty, or tax, that a government puts on products that are imported into the country.
B) the maximum amount of a product that can be imported or exported.
C) a law that a government uses to regulate products that are imported into the country.
D) a prohibition or suspension of foreign trade of specific imports or exports.
Small firms pursuing a cost leadership strategy have an advantage in reaching
customers whose primary purchase criterion is:
A) quality.
B) constant innovation.
C) price.
D) customer service.
In the recent Supreme Court ruling in Burlington Industries vs. Ellerth, the court held:
A) employers were no longer liable for third-party sexual harassment.
B) there does not have to be a superior-subordinate relationship for harassment to occur.
C) complainants must prove intent to harass on the part of the harasser.
D) employers are automatically liable if supervisors take tangible employment action
toward the person they are harassing.
Which of the following media account for the greatest portion of advertising
expenditures?
A) Internet
B) Radio
C) Television
D) Magazines
________ include(s) the unit cost of a manufacturer’s product under an absorption
costing system.
A) Opportunity costs
B) Depreciation
C) Insurance
D) Variable costs
________ is the ability to develop new ideas and to discover new ways of looking at
problems and opportunities.
A) Showboating
B) Commoditizing
C) Innovation
D) Creativity
When franchisees purchase their franchises and sign the contract, they agree to sell the
franchisor’s product or service by following its prescribed formula.
When Fred Goodman sued Wendy’s over his broken tooth due to bone fragments in his
hamburger, he sued them on the basis of:
A) breach of implied warranty of merchantability.
B) negligent manufacturing.
C) failure to warn and negligent design.
D) implied warranty of fitness.
One advantage of buying an existing business is:
A) you always get the best location.
B) the opportunity to participate in a national advertising campaign.
C) equipment is installed and production capacity is known.
D) easy implementation of innovations and changes from past policies.
________ pricingis when the base product is not functional without the appropriate
accessory.
A) Captive-product
B) Optional-product
C) By-product
D) None of the above
________ states that a seller cannot require a buyer to purchase only his/her product to
the exclusion of other competitive sellers’ products.
A) The Clayton Act
B) The Sherman Act
C) The Robinson-Patman Act
D) The Miller-Tydings Act
A ________ is a promise or statement of fact by the seller about a product.
A) sales warranty
B) sales contract
C) copyright
D) contractual capacity
Despite all the benefits, there are a number of disadvantages to franchises, such as:
A) the time consumed by the management training and support the franchiser provides.
B) the cost of national advertising.
C) strict adherence to standardized operations.
D) territory limitations.
The phrase, “avoid the off-the-shelf, ‘cookie-cutter’ approach that produces look-alike
plans” means:
A) avoiding a business plan that looks ordinary.
B) that every business plan is unique.
C) the business plan should reflect the excitement of the entrepreneur.
D) All of the above
Companies with strong reputations for quality follow certain guidelines, such as:
A) establishing long-term relationships with suppliers.
B) fostering individual effort and pride of workmanship.
C) rewarding employees for compliance to rules and procedures.
D) building an extensive quality inspection system with many quality inspectors.
Sweep account refers to:
A) an account that sweeps cash from checking to personal savings.
B) an account that sweeps zero balance account to an interest bearing account.
C) an account that allows the small business owner to sweep funds between personal
and business accounts.
D) All of the above
The ________ ratio is a measure of the small company’s ability to pay current debts
from current assets.
A) debt-to-net worth
B) current
C) quick
D) debt-to-assets
The second essential purpose for creating a business plan is:
A) to guide the operation of the company by charting its future course and devising a
strategy for following it.
B) to attract lenders and investors.
C) to file with the SEC before making a public stock offering.
D) to attract potential managers and employees to run the new venture.
The greater the reward or the smaller the penalty for unethical acts, the greater is the
probability that such behavior will occur. This refers to:
A) competitive pressures.
B) opportunity pressures.
C) globalization pressures.
D) personal pressures.
If a haberdasher purchases a tie for $12 and plans to sell it for $18, the percentage of
retail price markup would be:
A) 33%.
B) 50%.
C) 175%.
D) 100%.
A bank account that technically never has funds in it but is tied to another master
account so that when checks are presented for payment the master account is debited,
permitting the company to use its own money during the “float” period, is called a(n):
A) cash account.
B) accrual account.
C) sweep account.
D) zero balance account.
Issues to be addressed before entering into a joint venture include:
A) What contributions will each party make?
B) Who will be responsible for making which decisions?
C) Under what circumstances can the parties terminate the relationship?
D) All of the above
Barker Industries makes an annual donation of $100,000 to local charities, and allows
its top managers leaves of absence to serve charities involved in community service.
What area of social responsibility is Barker demonstrating?
A) Customers
B) Environment
C) Employees
D) Community