The quick ratio is the most commonly used measure for a small firm’s short-term
solvency.
The best way to deal with shoplifting is to take steps to prevent it rather than stress
catching the shoplifter in the act.
Most small businesses start out strong financially because of the care generally given in
determining the total asset requirements for running the business.
While customer contact is important to a small business, excellent products and low
prices can offset any problems a small business may have with customer service.
When Wal-Mart began having McDonald’s restaurants share their retail space they were
exercising master franchising.
The small firm’s income statement presents a picture of the firm’s profitability at a
particular point in time.
Effective interviewers spend about 75% of their time listening to the candidate.
The entrepreneur who buys an existing business must recognize that accounts
receivable rarely are worth their “face value.”
“Angels” usually prefer to invest in businesses they know something about.
Managing cultural diversity in the workforce is getting easier as society becomes more
diverse.
Layout of any retail facility requires the owner’s observation and understanding of
customers’ buying habits.
Key to a successful family business is shared values.
The majority of the loans a commercial finance company makes are unsecured by
collateral.
The corporation, like the proprietorship, avoids the “double taxation” disadvantage
associated with the partnership form of ownership.
Measuring the success of its Web-based sales effort is essential to remaining relevant to
customers whose tastes, needs, and preferences are always changing.
Cumulative quantity discounts are provided to members of the distribution channel in
recognition of the services they provide the manufacturer.
The best insurance against ethical violations is the hiring of people with strong moral
principles.
Perhaps the worst of all marketing catastrophes is to have great advertising and a poor
quality product or service.
In 1996, passage of the Small Business Regulatory Enforcement Fairness Act provided
small businesses with some relief from government regulation.
Globalization is risky.
Trade show advertisements reach a particular type of customersthose who have already
made a purchase decision.
The left brain handles language, logic, and symbols.
Two factors are vital to studying the effects of competition on a small firm’s pricing
policies: the location of the competitors and the nature of the competing goods.
The legal remedies for breach of contract are designed to put the nonbreaching party in
the same position as if the contract had been carried out.
In terms of social responsibility to the consumer, consumers have a right to be heard by
the company.
An employer can be held liable for sexual harassment if he/she knew or should have
known of the harassment and failed to take prompt action to stop it.
On the Web, “more” does not necessarily equate to “better.”
The biggest benefit of going public is the capital infusion the company receives.
Entrepreneurs must create an environment in which all types of workersmen, women,
Hispanic, African American, white, disabled, homosexual, elderly, and otherscan
flourish and can give top performances to their companies.
Giving customers a chance to complain about a problem usually is fruitless; once a
business makes a customer angry, he typically will not buy from that company again
under any circumstances.
Hiring the previous owner as a consultant for the first few months can be a valuable
investment.
One of the most important groups of stakeholders that a business must satisfy is its
customers.
“Copreneurs” are entrepreneurial couples who work together as co-owners of their
business.
Creative thinkers tend to be “explorers,” searching for ideas outside of their areas of
specialty.
Contacting local business and civic groups, sponsoring a seminar, offering to be
interviewed on a radio show are types of publicity a small business owner could use.
Executive summary is the broadest expression of a company’s purpose and defines the
direction in which it will move.
A banner ad is an ad page that appears for a short time before a user-requested page
appears.
SBICs provide only debt financing to small businesses.
The average conversion rate is about 10 percent.
Break-even analysis is somewhat complex to use, but it is a final screening device.
Like a sole proprietorship, a partnership suffers from the disadvantage of:
A) poor capital accumulation.
B) limited liability for all owners.
C) double taxation of profits.
D) the complexity of regulations under which it must operate.
If Mary wants to compare what her small business owes to what it owns in order to
assess her ability to meet obligations in case of liquidation, she needs to look at the
________ ratio.
A) quick
B) total debt turnover
C) asset turnover
D) debt-to-net worth
Carlos owns a heavy equipment repair and maintenance business. Which of the
following criteria for selecting a state in which to locate the business would be of
greatest concern to Carlos?
A) Labor supply
B) Proximity to markets
C) Tax laws and incentives
D) Proximity to raw materials
Most marketing experts contend that the greatest marketing mistake small businesses
make is:
A) failing to identify the target market.
B) spending too little on advertising.
C) underpricing their products and services.
D) spending too little on quality improvement.
When a buyer is reviewing a candidate company’s lease arrangements, location and
appearance, intangible assets, etc., he is answering what basic acquisition question?
A) Is the business financially sound?
B) Why does the owner want to sell?
C) What is the physical condition of the business?
D) What legal aspects should be considered?
A ________ is what a customer gains from the product or service feature.
A) feature
B) bonus
C) discount
D) benefit
The two factors that make a deal attractive to venture capitalists are:
A) effective marketing strategies and networking opportunities.
B) high returns and a convenient (and profitable) exit strategy.
C) high returns and networking opportunities.
D) a convenient and (profitable) exit strategy and effective marketing strategies.
Bootstrap marketing also is sometimes known as:
A) ambush marketing.
B) target marketing.
C) customer marketing.
D) guerilla marketing.
When it comes to gathering market research on customers, most small companies tend
to be:
A) as good at it as large companies.
B) at a severe disadvantage in comparison to large companies.
C) data rich, lots of facts, but information poor, little in a useful form.
D) less effective at defining the research problem than larger companies.
The ________ codifies the body of law dealing with partnerships in the United States.
A) Small Business Partnership Agreement
B) Uniform Partnership Act (UPA)
C) Partnership Agreement
D) None of the above
Which of the following is an effective way to trim overhead?
A) Leasing inventory
B) Accelerating accounts receivable
C) Establishing lockboxes or zero balance accounts
D) Negotiating fixed loan payments to coincide with company cash flow
Buyer owns a retail shop in Baltimore. Seller is a manufacturer in San Diego. Buyer
orders from seller to be shipped “F.O.B. San Diego.” Risk of loss passes to the buyer
when:
A) the seller delivers the goods to the carrier.
B) the goods are identified to the contract.
C) the contract is made.
D) the goods are delivered to the buyer’s retail shop.
In a retail environment, rather than build inventories of merchandise that might sit for
months before selling (or worse, never sell at all), retailers using ________ replenish
their inventories constantly on an as-needed basis.
A) electronic inventory process
B) electronic consumer behavior
C) efficient consumer response (ECR)
D) None of the above
In Web analytics, CPA is the acronym for:
A) customers per acquisition.
B) cost per account.
C) customers per account.
D) cost per acquisition.
What are the guidelines for building a successful Web strategy for a small e-company?
A) Fill a niche
B) Have a lot of products on sale
C) Have advanced technology
D) Bring advertising revenue by selling banners
Which of the following statements about valuing a business is true?
A) The balance sheet technique is the best way to value a business.
B) Business valuation is partly art and partly science.
C) Buyers should rely on established “rules of thumb” to decide what a company is
worth.
D) The primary reason buyers purchase existing businesses is to get their current
earning potential.
When the buyer is examining the income statements, tax returns, and balance sheets of
the business, he/she is seeking an answer to the basic question:
A) Is the business financially sound?
B) Why does the owner want to sell?
C) What is the physical condition of the business?
D) What legal aspects should be considered?
A business plan performs a number of functions including:
A) identifying how many employees will be needed in the business start-up phase.
B) attracting capital for the start-up.
C) providing the entrepreneur with a plan for managing inventory.
D) providing the basis for purchasing property and casualty insurance for the new
company.
________ measure how efficiently the firm is operating and offer information about its
bottom line.
A) Operating ratios
B) Profitability ratios
C) Balance Sheet ratios
D) All of the above
The real value in preparing a business plan is:
A) in attracting experienced management talent to help grow the business.
B) in the creative process the entrepreneur has to go through.
C) in identifying viable funding sources while “fleshing out” the business concept.
D) None of these
The tax that a government puts on products that are imported into a country is called
a(n):
A) embargo.
B) tariff.
C) quota.
D) non-tariff barrier.
The UCC requires that:
A) the sale of all goods and services be warranted.
B) only written contracts for the sales of goods over $1,500 are enforceable.
C) verbal contracts are as enforceable as written contracts, regardless of the amount of
the consideration.
D) no new consideration need be offered if a contract is modified in good faith.
Innovative companies do not take a(n) ________ approach to creativity.
A) proactive
B) active
C) passive
D) All of the above
If you can’t afford to invest in foreign facilities, don’t have time to even learn the
foreign market, but you are willing to give someone else the right to make and market
your product for a fee and royalties, your best bet for entering the foreign market is:
A) a foreign management company.
B) joint venturing.
C) foreign licensing.
D) international franchising.
SBICs may lend up to ________% of their private capital to a single client.
A) 10
B) 30
C) 20
D) 49
When evaluating the floors, walls, and ceilings in a retail store, the small business
owner should:
A) look for dark colored ceilings that both conserve energy and project a cool feeling.
B) strive for a light and bright interior.
C) look for bare functional walls that can be recovered at the owner’s expense.
D) emphasize function over attractiveness.
The inventory turnover ratio is computed by:
A) dividing the firm’s cost of goods sold by its average inventory.
B) dividing average inventory by firm’s cost of goods sold.
C) dividing the firm’s revenue by its average inventory.
D) dividing all costs by its average inventory.
What software scans computer drives for viruses and nasty programs?
A) Virus detection
B) Firewall
C) Server application
D) Detention software
When dealing with AIDS in the workplace, small business owners should:
A) treat AIDS-positive employees as they would any other employees with life
threatening illnesses.
B) make certain their employment policies comply with local regulations but not worry
about federal regulations.
C) require HIV screening as part of the hiring process.
D) inform all employees when someone tests HIV positive.
The ideal franchising relationship is a ________ based on trust.
A) corporation
B) partnership
C) sole proprietorship
D) social enterprise
Investors look for which of the following when reviewing the experience of the
management team of a new venture?
A) Assets that can be used as collateral for the loan/investment
B) Experience, talent, and integrity
C) Plans for keeping the management team in place
D) A hiring strategy that has the customer clearly in focus
The ________ highlights significant financial and operational events in the company’s
life and should concentrate on the company’s accomplishments.
A) executive summary
B) company history
C) business and industry profile
D) marketing strategy
A high debt ratio:
A) means that creditors provide a large percentage of the company’s total financing.
B) gives a small business more borrowing capacity.
C) decreases the chances that creditors will lose money if the business is liquidated.
D) decreases the creditor’s interest in the business.