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This for Dr. Bat’s Intro to Entrepreneurship class at Oklahoma State University. These are just the vocabulary terms for the final exam. Questions that might be on the exam are on another knowt on my account.
What is a 10-K?
A report that is similar to the annual report, except that is contains more detailed information about the company’s business
What is an accounts receivable?
The money owed to a firm by its customers
What is a assumptions sheet?
An explanation in a new firm’s business plan of the sources of the numbers for its financial forecast and the assumptions used to generate them
What is a balance sheet?
A snapshot of a company’s assets, liabilities, and owners’ equity at a specific point in time
What is a break-even point?
The poin at which total revenue received equals total costs associated with the output
What are budgets?
Itemized forecasts of a company’s income, expenses, and capital needs that are also important tools for financial planning and control
What is the constant ratio method of forecasting?
A forecasting approach using the percent of sales method in which expense items on a firm’s income statement are expected to grow at the same rate as sales
What is cost of sales?
All the direct costs associated with producing or delivering a product or service, including the material costs and direct labor costs (also cost of goods sold)
What is current assets?
Cash plus items that are readily convertible to cash, such as accounts receivable, inventories, and marketable securities
What is current liabilities?
Obligations that are payable within a year, including accounts payable, accrued expenses, and the current portion of long-term debt
What is current ratio?
A ratio that equals the firm’s current assets divided by its
What is debt-to-equity ratio?
A ratio calculated by dividing the firm’s long term debt by its shareholders’ equity
What is efficiency?
How productively a firm utilizes its assets relative to its rate of return
What is financial management?
The process of raising money and managing a company’s finances in a way that achieves the highest rate of return
What are financial ratios?
Ratios showing the relationships between items on a firm’s financial statements that are used to discern whether a firm is meeting its financial objectives and how it stacks up against industry peers
What are fixed assets?
Assets used over time frame, such as real estate, buildings, equipment, and furniture
What are forecasts?
Estimates of a firm’s future income and expenses, cased on its past performance, its current circumstances, and it s future plans
What are historical finanicial statements?
Financial statements that reflect past performance and are usually prepared on a quarterly and annual basis
What is a income statement?
A financial statement that reflects the results of the operations f a firm over a specified period of time: prepared on a monthly, quarterly, or annual basis
What is inventory?
A company’s merchandise, raw materials, and products waiting to be sold
What are investing activities?
Activities that include the purchase, sale, or investment in fixed assets, such as real estate and buildings
What is liquidity?
The ability to sell a business or other asset quickly at a price that is close to its market value: also, a company’s ability to meet its short-term financial obligations
What are long-term liabilities?
Notes or loans that are repayable beyond one year, including liabilities associated with purchasing real estate, buildings, and equipment
What are net sales?
Total sales minus allowances for returned goods and discounts
What are operating activities?
Activities that affect net income (or loss), depreciation, and changes in current assets and current liabilities other that cash and short term debt
What are operating expenses?
Marketing, administrative costs, and other expenses not directly related to producing a product or service
What are other assets?
Miscellaneous assets including accumulated goodwill
What is owner’s equity?
The equity in the business by its owner(s) plus the accumulated earnings retained by the business after paying dividends
What is percentage-of-sales method?
A method of expressing each enterprise item as a percent of sales
What is price-of-earnings or P/E ratio?
A simple ratio that measures the price of a company’s stock against its earnings
What is a pro forma balance sheet?
Provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time
What is a pro forma balance sheet?
Provides a firm a sense of how its activities will affect its ability to meet its short-term liabilities and how its finances will evolve over time
A financial statement that shows the projected results of the operations of a firm over a specific period
What is a pro forma statement of cash flows?
A financial statement that shows the projected fow of cash into and out of a company for a specific period
What is a profit margin?
A measure of a firm’s return on sales that is computed by dividing net income by average net sales
What is profitability?
The ability to earn a profit
What is working capital?
A firm’s current assets minus its current liabilities
What is a advisory board?
A panel of experts who are asked by a firm’s managers to provide counsel and advice on an ongoing basis; unlike a board of directors, an advisory board possesses no legal responsibilities for the firm and gives non-binding advice
What is a Board of Directors?
A panel of individuals who are elected by a corporation’s shareholders to oversee the management of the firm
What is a consultant?
An individual who gives professionals or expert advice. ( fall into to categories (paid and non profit or low pay through government)
What is an employee?
Someone who works for a business, at the business’ location or virtually, utilizing the business’ tools and equipment and according to the business’ policies and procedures
What is a freelancer?
A person who is in business for themselves, works on their own time with their own tools and equipment, and performs services for a number of different clients
What is a founding team?
A team of individuals chosen to start a new venture. A firm with this team has an advantage over firms started by an individual because a team brings more talent, resources, ideas, and professional contacts to a new venture than does a sole entrepreneur
What is heterogeneous?
A team who individual members are diverse in terms of their abilities and experiences
What is homogenous?
A team whose individual members’ experiences and areas of expertise are very similar to one another
What is a inside director?
A person on a firm’s board of directors who is also an officer of the firm
What is an intern?
A person who works for a business as an apprentice or trainee for the purpose of obtaining practical experience
What is liability of newness?
Situation that often causes new firms to falter because the people who start firms can’t adjust quickly enough to their new roles, and because the firm lacks “track record” with customers and suppliers
What is networking?
Building and maintaining relationships with people whose interests are similar or whose relationship could bring advantages to a firm
What is a new-venture team?
The group of founders, key employees, and advisors that move a new venture from an idea to a fully functioning firm
What is a outside director?
Someone on a firm’s board of directors who is not employed by the firm
What is prior entrepreneurial experience?
Prior start up experience; (This experience has been found to be one of the most consistent predictors of future entrepreneurial performance)
What is relevant industry experience?
Experience in the same industry as an entrepreneur’s current venture that includes a network of industry contacts and an understanding of the subtleties of the industry
What is signaling?
The act of high-quality individual agreeing to serve on a company’s board of directors, indicating that the individual believes that the company has the potential to be successful
What is a skills profile?
A chart that depicts the most important skills that are needed and where skills gaps exist
What is a virtual assistant?
A freelancer who provides administrative, technical, or creative assistance to clients remotely from a home office
What is 7(A) Loan Guaranty Program?
The main Small Business Administration (SBA) program available to small businesses operating through private sector lenders providing loans that are guaranteed by SBA (loan guarantees reserved for small businesses that are unable to secure financing through normal lending channels)
What is a accredited investor?
A person who is permitted to invest in high-risk investments such as business start-ups
What is bootstrapping?
Using creativity, ingenuity, or any means possible to obtain resources other than borrowing money or raising capital from traditional sources
What is burn rate?
The rate at which a company is spending its capital until it reaches profitability
What are business angles?
Individuals who invest their personal capital directly in new ventures
What is carry?
The percentage of the profits the venture capitalists receive
What is corporate venture capital?
A type of capital similar to traditional venture capital, except that the money comes from corporations that invest in new ventures related to their areas of interest
What is crowdfunding?
A method of funding in which people pool their money and other resources, usually via the Internet, to support efforts initiated by other people or organizations
What is debt financing?
Getting a loan (most common sources of debt financing are commercial banks and the Small Business Administration’s (SBA’s) guaranteed loan program)
What is due diligence?
The process of investigating the merits of a potential venture and verifying the key chains made in the business plan
What is a elevator speech (or pitch)?
A brief, carefully constructed statement that outlines the merits of a business opportunity
What is equity-based crowdfunding?
This type of funding helps businesses raise money by tapping individuals who provide funding in exchange for equity in the business
What is equity financing?
A means of raising money by exchanging partial ownership of a firm, usually in the form of stock, for funding
What is factoring?
A financial transaction whereby a business sells its accounts receivable to a third party, called a factor, at a discount in exchange for cash
What is final prospectus?
Documents issued by the investment bank after the Securities and Exchange Commission (SEC) has approved the offering that sets a date and issuing price for the offering
What is follow-on funding?
Additional funding for a firm following the initial investment made by investors
What are general partners?
The venture capitalists who manage a venture capital fund
What is a Initial Public Offering (IPO)?
The first sale of a company’s stock to the public and an important milestone for a firm for four reasons: it is a way to raise equity capital; it raises a firm’s public. Profile; it is a liquidity event; and it creates another form of currency (company stock) that can be used to grow the company
What is a investment bank?
A financial institution that acts as an underwriter or agent for a firm issuing securities
What is a lease?
A written agreement in which the owner of a piece of property allows an individual or business to use the property for a specified period of time in exchange for regular payments
What are limited partners?
participants in a partnership, such as a venture capital fund, which have limited liability, meaning that they are only liable up to the amount of their investment and have no management authority
What is line of credit?
A borrowing “cap” is established and borrowers can use the credit at their discretion; requires periodic interest payments
What is a liquidity event?
An occurrence such as a new venture going public, finding a buyer, or being acquired by another company that converts some or all of a company’s stock into cash
What are peer-to-peer lenders?
A category of financial transactions which occur directly between individuals or “peers”
What are preliminary prospectus?
A document issued by an investment bank that describes the potential offering to the general public while the SEC is conducting an investigation of the offering (also red-herring)
What is private placement?
A variation of the IPO in which there is a direct sale of an issue of securities to a large institutional investor
What is a promissory note?
A document that details the terms of a loan agreement
What is rewards-based crowdfunding?
This type of funding allowed entrepreneurs to raise money in exchange for some type of amenity or reward
What is a road show?
A whirlwind tour taken by the top management team of a firm wanting to go public (consists of meeting key cities where firm presents its business plan to groups of investors)
What are rounds?
Stages of subsequent investments made in a firm by investors
What is Sarbanes-Oxley Act?
A federal law that was passed in response to corporate accounting scandals involving prominent corporations
What is a SBA Guaranteed Loan Program?
An important source of funding for small businesses in general in which approximately 50 percent of the 9,000 banks of the United States participate
What is the SBIR Program?
Small business innovation research (SBIR) competitive program that provides over $1 billion per year to small businesses for early stage and development projects
What is secondary market offering?
Any later public issuance of shares after the initial public offering
What is a single-purpose loan?
One common type of loan in which a specific amount of money is borrowed that must be repaid in a fixed amount of time with interest
What is the STTR Program?
A government grant program, similar to the SBIR program, which requires the participation of a research organization, such as a research university or a federal laboratory
What is sweat equity?
The value of time and effort that a founder puts into a new firm
What is vendor credit?
A form of credit in which a vendor extends credit to a business in order to allow he business to buy it products and/or services up front but defer payment until later
What is venture capital?
The money that is invested by venture capital firms in start-ups and small businesses with exceptional growth potential
What are venture-leasing firms?
Firms that act as brokers, bringing the parties involved in a lease together (EX: firms acquainted with the producers of specialized equipment match these producers with new ventures that are in need of the equipment)
What is yield rate?
The percentage of investment opportunities that are brought to the attention of angel investors that result in an investment
What is advertising?
Making people aware of a product or service in hopes of persuading them to buy it
What is a brand?
The set of attributes-positive Orr negative-that people associate with a company
What is brand equity?
The set of assets and liabilities that is linked to a brand and enables it to raise a firm’s valuation
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