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17 Cards in this Set
- Front
- Back
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Proprietorship:
# of owners? ease of startup? investor liability? firm life & liquidity? Taxation? |
One owner
little time and low legal costs Unlimited liability life determined by owner; difficult to transfer ownership Personal Tax rates |
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General Partnership
# of owners? ease of startup? investor liability? firm life & liquidity of ownership? taxation? |
Two or more
Moderate time and legal costs Unlimited liability Life determined by partners; difficult to transfer ownership Personal tax rates |
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Limited Partnership
# of owners? ease of startup? Investor liability? Firm life? Liquidity of ownership? Taxation? |
One or more general and one or more limited.
Moderate time and legal costs Limited for limited partners life determined by general partner Difficult to transfer ownership Personal tax rates |
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Corporation
# of owners? ease of startup? Investor liability? Firm life? Liquidity of ownership? Taxation? |
One or more; no limit
Long time and high legal costs Limited to shareholder's investments Unlimited Easy to transfer ownership Double taxed |
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S Corporation
# of owners? ease of startup? Investor liability? Firm life? Liquidity of ownership? Taxation? |
Fewer than 75 owners
Long time and high legal costs Limited to shareholders investments Unlimited Difficult to transfer ownership Personal tax rates |
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Limited Liability Company
# of owners? ease of startup? Investor liability? Firm life? Liquidity of ownership? Taxation? |
One or more
Long time and high legal costs Limited to owner's interests Life set by owners Difficult to transfer ownership Personal tax rates |
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Five stages of a firm's life cycle
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Development Stage
Startup Stage Survival Stage Rapid-growth Stage Early Maturity Stage |
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What are different types of venture financing and when would they be used?
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Seed financing - Funded by Entrepreneur and family/friends in the development stage
Start up financing - funding might include business angels and venture capitalists in the startup stage First-round financing - funds provided during the survival stage to cover the cash shortfall when expenses and investments exceed revenues Second-round financing - financing for ventures in their rapid-growth stage to support investments in working capital Mezzanine financing - Final round of financing in the rapid-growth stage |
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Describe the 8 venture capital firm requirements
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1. Cashout potential -
2. Equity Share 3. Familiarity with technology, market 4. Geographic Location 5. Risk 6. Rate of Return 7. Size of investment 8. Stage of development |
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The five C's of credit analysis
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Collateral
Capacity to repay - most important Character Capital invested - skin entrepreneur has in game Conditions - intended purpose of the loan |
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Describe at least 5 common loan restrictions
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1. Must maintain accurate records
2. Limits on total debt 3. Performance standards on financial ratios 4. Restrictions on dividends 5. Restrictions on additional capital expenditures |
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Quick Ratio
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(Average Current Assets - Average Inventories)/ Average Liabilities
Ability of firm to pay its debts immediately |
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Current Ratio
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Average Current Assets / Average current liabilities
Ability of firm to pay its debts within 12 months |
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Interest Coverage Ratio
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EBIDTA / Interest
ability of a firm to cover its interest payments |
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What is the difference between regular breakeven analysis and the NOPAT/EVA type of breakeven analysis?
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Regular breakeven analysis uses ONLY CASH
NOPAT type of breakeven analysis includes all operating expenses but excludes interest |
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What is the ROA model?
Why is it useful? |
income/sales * sales/average total assets
It is easier to see what is affecting the ROA |
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What is the ROE model?
Why is it useful? |
income/sales * sales/average total assets * ROE/ROA
It is easier to see what is affecting ROE |
