ENTREPRENEURSHIP (MGT190 - HK2) EXAM 2 (2015)

MGT190-HK2. ENTREPRENEURSHIP (MGT190-HK2) > TAKE ASSESSMENT: MGT 190 EXAM 2

Question 1

1.25 points

To minimize bad debt losses, small business owners should:

[removed]		a. screen customers carefully before granting them credit.
[removed]		b. ask customers to complete a detailed credit application that will enable business owners to judge their creditworthiness.
[removed]		c. check customers' credit references.
[removed]		d. establish a firm credit-granting policy and inform every customer in advance of their companies' credit terms.
[removed]		e. All of the above.

Question 2

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"What drives my customers' behavior? Why do they buy these goods and services? What values are most important to them?" Questions such as these address which type of marketing information?

[removed]		a. geographic
[removed]		b. demographic
[removed]		c. psychographic
[removed]		d. monolithic

Question 3

1.25 points

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A unique selling proposition (USP):

[removed]		a. must be something that competitors do not or cannot provide.
[removed]		b. answers the critical question that every customer asks: "What's in it for me?"
[removed]		c. is based on the primary benefits, either tangible or intangible, a business can offer its customers.
[removed]		d. All of the above.

Question 4

1.25 points

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Leasing is called an 'off the balance sheet' method of financing because leases are an operating expense on the income statement, not a liability on the balance sheet.

[removed]	True
[removed]	False

Question 5

1.25 points

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Blending show business with the retail business, Golf Galaxy offers its customers a variety of fun features, including an in-store putting green, a driving range, and a golf simulator that lets golfers "play" any one of 32 world-famous courses, no matter what the weather outside is. Golf Galaxy is using which principle of guerrilla marketing?

[removed]		a. demographic analysis
[removed]		b. entertailing
[removed]		c. data mining
[removed]		d. time compression management

Question 6

1.25 points

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A survey by the Yellow Pages Publishers Association found that _____ percent of businesses had received bogus bills for Yellow Pages advertising.

[removed]		a. 20
[removed]		b. 33
[removed]		c. 50
[removed]		d. 80

Question 7

1.25 points

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Which of the following is a characteristic of radio advertising?

[removed]		a. Nearly universal infiltration.
[removed]		b. Ability to target various audiences by selecting the proper radio stations.
[removed]		c. Need for repetition of an ad to be effective
[removed]		d. All of the above

Question 8

1.25 points

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Cash is the most important but least productive asset the small business has.

[removed]	True
[removed]	False

Question 9

1.25 points

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The __________ takes a "snapshot" of a business, giving the owner an estimate of the company's worth as of a given date.

[removed]		a. income statement
[removed]		b. balance sheet
[removed]		c. statement of cash flows
[removed]		d. debt ratio

Question 10

1.25 points

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The heart of the cash budget is the __________ forecast.

[removed]		a. income
[removed]		b. profit
[removed]		c. sales
[removed]		d. accounts receivable

Question 11

1.25 points

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To capitalize on the diversity that the domestic market provides, small businesses should:

[removed]		a. use a "shotgun approach" to marketing, firing marketing blasts at every potential customer they see, hoping to capture some of them.
[removed]		b. pursue a "one-size-fits-all" marketing approach designed to appeal to the mass market so that they can reach as many potential customers as possible.
[removed]		c. follow a "rifle approach" to marketing, focusing on narrow market segments and taking the time to recognize, understand, and cater to the specific needs of each segment.
[removed]		d. try to outspend their competitors in advertising, promotional, and marketing campaigns.

Question 12

1.25 points

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Which of the following is not a component of time compression management (TCM)?

[removed]		a. minimizing the number of new products the company introduces.
[removed]		b. shortening customer response time.
[removed]		c. reducing the administrative time required to fill an order.
[removed]		d. All of the above.

Question 13

1.25 points

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About two-thirds of the customers who stop patronizing a particular store do so because:

[removed]		a. its prices are too high.
[removed]		b. the quality of its products and services is too low.
[removed]		c. an indifferent employee treated them poorly.
[removed]		d. its location is inconvenient.

Question 14

1.25 points

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A low net sales to working capital ratio indicates the firm is not using its working capital efficiently.

[removed]	True
[removed]	False

Question 15

1.25 points

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When making a business plan presentation, an entrepreneur should:

[removed]		a. plan to have at least one hour to explain the business, its benefits and its value.
[removed]		b. explain in detail the technology or the mechanics behind the product or service and the effort and time required to develop it.
[removed]		c. Use visual aids to punctuate the presenter's spoken message and to focus the audience's attention on the most important points.
[removed]		d. All of the above.

Question 16

1.25 points

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Businesses that accept credit cards increase the __________ of customer spending.

[removed]		a. speed
[removed]		b. probability
[removed]		c. magnitude
[removed]		d. all of the above

Question 17

1.25 points

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When the typical customer encounters rude or discourteous service from a company, he or she

[removed]		a. does not complain.
[removed]		b. does not buy from that business again.
[removed]		c. tells other people about his or her bad experience with that business.
[removed]		d. all of the above

Question 18

1.25 points

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A typical manufacturing company pays __________ percent of the value of its inventory to cover the cost of borrowed money, warehouse space, materials handling, staff, lift-truck expenses, and fixed costs.

[removed]		a. 10 to 15
[removed]		b. 25 to 30
[removed]		c. 35 to 40
[removed]		d. 50 to 55

Question 19

1.25 points

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The Downtown Hobby Shop expects net daily sales of $1200, with the cost of goods sold at $750 and total expenses of $250. Variable expenses, including cost of goods sold, is estimated at $800, with fixed expenses of $200. What is the contribution margin?

[removed]		a. 33%
[removed]		b. 25%
[removed]		c. 27%
[removed]		d. 75%

Question 20

1.25 points

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__________ is a technique in which a business marks down the customary price of a popular item in an attempt to draw more customers.

[removed]		a. leader pricing
[removed]		b. price lining
[removed]		c. uniform delivered pricing
[removed]		d. bundling

Question 21

1.25 points

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Which of the following is not an advantage of newspaper advertising?

[removed]		a. Short closing times for advertising copy.
[removed]		b. Low costs.
[removed]		c. Rapidly rising readership rates.
[removed]		d. Flexibility in the size, location, and timing of advertisements.

Question 22

1.25 points

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Markup is:

[removed]		a. the difference between the cost of a good or service and its selling price.
[removed]		b. the variable expenses required to produce a product divided by the sales revenue it generates.
[removed]		c. the sum of a product's fixed costs per unit and its variable costs per unit.
[removed]		d. the portion of a product's sales price that is left over to contribute to covering its variable expenses and earning a profit after deducting its fixed expenses.

Question 23

1.25 points

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Nigel Bruce, owner of The Men's Market, an upscale men's clothing store, is reviewing his company's balance sheet for the previous month. Where on the balance sheet will Nigel find the value of the company's inventory listed?

[removed]		a. current liabilities
[removed]		b. long-term liabilities
[removed]		c. current assets
[removed]		d. fixed assets

Question 24

1.25 points

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To be most effective an outdoor ad should:

[removed]		a. use fancy, upper-case letters in bold print to attract attention.
[removed]		b. be located on the left side of the highway where they will produce the highest recall scores among viewers.
[removed]		c. emphasize simplicity, using short words and short ad copy to get noticed.
[removed]		d. All of the above.

Question 25

1.25 points

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The first step in conducting market research is:

[removed]		a. collecting the data
[removed]		b. analyzing the data
[removed]		c. defining the problem
[removed]		d. buying a mailing list from a list broker

Question 26

1.25 points

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Which of the following statements concerning advertising is false?

[removed]		a. With creativity and ingenuity, a small company can make its advertising voice heard above the clamor of its larger competitors and still stay within a limited budget.
[removed]		b. Advertising is a "luxury" expense that small companies should consider only after they have covered all of their other expenses.
[removed]		c. Without a steady advertising and promotion budget, a small company?s customer base will soon dry up.
[removed]		d. Because of many factors, including overwhelming ad clutter, increasingly fragmented audiences, and more skeptical consumers, companies have had to become more creative in their advertising and promotional campaigns.

Question 27

1.25 points

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Which of the following statements is false?

[removed]		a. A company can have a solid balance sheet and to make a profit and still go out of business because it runs out of cash.
[removed]		b. Young fast-growing companies, especially, are cash sponges, soaking up every available dollar and always hungry for more.
[removed]		c. A business owner can be certain that if a company is earning a healthy profit, its cash flow is also healthy.
[removed]		d. None. All of the above statements are true.

Question 28

1.25 points

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Which of the following statements most accurately reflects the relationship between the startup cash required for a company and its anticipated inventory turnover ratio?

[removed]		a. The higher a company's average inventory turnover, the greater the amount of startup cash it will require.
[removed]		b. The higher a company's average inventory turnover, the smaller the amount of startup cash it will require.
[removed]		c. A company's startup cash requirement is equal to its average inventory turnover times 12.
[removed]		d. There is no connection between a company's average inventory turnover and the amount of startup cash it will require.

Question 29

1.25 points

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Which of the following is not an effective way to improve the level and quality of customer service in a company?

[removed]		a. When you create a dissatisfied customer, fix the problem fast.
[removed]		b. Discourage customers from complaining; giving them the chance to verbalize their complaints only alienates them more.
[removed]		c. Ask employees for ideas on how to improve customer service; studies show that front-line workers can predict nearly 90 percent of the cases that produce customer complaints.
[removed]		d. None. All of the above are effective ways to improve the level and quality of customer service in a company?

Question 30

1.25 points

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High prices and low perceived quality create a(n) ______ image.

[removed]		a. contradictory
[removed]		b. upscale
[removed]		c. bargain
[removed]		d. value

Question 31

1.25 points

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[removed]		a. $250
[removed]		b. $800
[removed]		c. $1000
[removed]		d. $606

Question 32

1.25 points

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The "big three" of cash management are:

[removed]		a. sales, accounts receivable, and accounts payable
[removed]		b. sales, inventory, and net income
[removed]		c. inventory, accounts payable, and accounts receivable
[removed]		d. accounts payable, accounts receivable, and sales

Question 33

1.25 points

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Mariel Hanson has just completed a ratio analysis for her antique store. The company's cost of goods sold for the preceding year was $816,632, and its inventory turnover ratio was 2.76 times per year. Using this data, Mariel calculates her company's average inventory to be $295,881. Mariel has since discovered that the average inventory turnover ratio for her industry is 4.1. If Mariel could boost her inventory turnover ratio to the industry average of 4.1, what would be the result on her company's average inventory level?

[removed]		a. It would climb to $3,348,191.
[removed]		b. It would fall to $199,179.
[removed]		c. It would remain unchanged at $295,881.
[removed]		d. Impossible to calculate from the data given

Question 34

1.25 points

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Customers use credit cards to pay for __________ out of every $100 spent on consumable goods and services.

[removed]		a. $12
[removed]		b. $28
[removed]		c. $41
[removed]		d. $52

Question 35

1.25 points

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A times interest earned ratio that is well above the industry average indicates that:

[removed]		a. A company is carrying a debt load that is excessive.
[removed]		b. A company would be able to meet the interest payments on its debt with little or no difficulty.
[removed]		c. A company represents a high credit risk to bankers and other lenders because of the likelihood of defaulting on its debts.
[removed]		d. All of the above.

Question 36

1.25 points

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A business plan that an entrepreneur is planning to present to someone outside the company should:

[removed]		a. be visually appealing, including color charts, figures, and diagrams to illustrate key points.
[removed]		b. be free of spelling and grammatical errors.
[removed]		c. include a table of contents that makes it easy for the reader to navigate the plan.
[removed]		d. all of the above.

Question 37

1.25 points

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In a price war:

[removed]		a. entrepreneurs usually overestimate the power of price cuts to attract and retain customers.
[removed]		b. sales volume rarely rises enough to offset the lower profit margins associated with a lower price.
[removed]		c. customers lured by lower prices usually have very little loyalty toward a business.
[removed]		d. All of the above.

Question 38

1.25 points

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To calculate the breakeven point, a business owner should use which of the following formulas?

[removed]		a. total variable expenses / contribution margin as a percentage of sales
[removed]		b. total fixed expenses / contribution margin as a percentage of sales
[removed]		c. (total revenue - total expenses) / total revenue
[removed]		d. contribution margin as a percentage of sales / total expenses

Question 39

1.25 points

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When it comes to preparing a business plan, entrepreneurs:

[removed]		a. should hire professional business plan writers to write their plans.
[removed]		b. must recognize that because every business is unique, every business plan must be tailor-made.
[removed]		c. should prepare a document that is at least 100 pages in length to prove to potential lenders and investors that they are well-prepared.
[removed]		d. All of the above.

Question 40

1.25 points

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The __________ is a "moving picture" of a company's profitability over a specific time period that compares its expenses against its revenue to show net profit (or loss).

[removed]		a. income statement
[removed]		b. balance sheet
[removed]		c. statement of cash flows
[removed]		d. debt ratio

Question 41

1.25 points

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Billing a portion of customers each day or week, instead of billing all customers all at once:

[removed]		a. is called cycle billing.
[removed]		b. may smooth out cash recipts.
[removed]		c. is called cycle billing and may smooth out cash receipts.
[removed]		d. None of the above.

Question 42

1.25 points

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__________ is any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor.

[removed]		a. publicity
[removed]		b. personal selling
[removed]		c. advertising
[removed]		d. promotion

Question 43

1.25 points

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__________ estimates the sales revenue a company would lose by measuring the percentage of customers who would leave because of poor service.

[removed]		a. Data mining
[removed]		b. Customer sensitivity analysis
[removed]		c. Customer alignment
[removed]		d. Revenue at risk

Question 44

1.25 points

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The __________ cost of an advertisement measures its cost per potential customer reached.

[removed]		a. absolute
[removed]		b. relative
[removed]		c. differential
[removed]		d. parametric

Question 45

1.25 points

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Alton Simmons, owner of Alton's Tire Service, suspects that some of his slow-paying customers are draining cash from his business. Although his credit terms are 30 days, Alton discovers that his average collection period ratio is 58 days. His average daily sales are $10,530. Using a normal rate of return of 12 percent, how much are Alton's slow-paying customers costing his company per year?

[removed]		a. $35, 380
[removed]		b. $37,908
[removed]		c. $73, 289
[removed]		d. $87,750

Question 46

1.25 points

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An effective market analysis in a business plan should include:

[removed]		a. a clear definition of the company's target market.
[removed]		b. the types of advertising and promotional campaigns that will reach the intended audience most effectively and efficiently.
[removed]		c. market size and trends.
[removed]		d. all of the above.

Question 47

1.25 points

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The worst mistake entrepreneurs make when defining the marketing strategy for their companies is:

[removed]		a. being overly specific when defining the target customers at whom they are aiming their products and services.
[removed]		b. budgeting an excessive amount of money for marketing and advertising.
[removed]		c. overwhelming potential lenders and investors with an excessive amount of detail about their marketing targets and strategies.
[removed]		d. failing to define their target market clearly and trying to make their businesses "everything to everybody."

Question 48

1.25 points

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Which of the following is a technique that top salespeople use?

[removed]		a. Use an indirect sales approach so that customers never suspect that a sales call is taking place.
[removed]		b. Measure their success strictly by the volume of sales they generate.
[removed]		c. See themselves as problem solvers for their customers rather than just vendors.
[removed]		d. Never leave sales literature with customers unless they specifically ask for it.

Question 49

1.25 points

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To get external financing, every business plan must pass three tests. The __________ test revolves around proving that a market for the company's products or services actually does exist.

[removed]		a. reality
[removed]		b. competitive
[removed]		c. value
[removed]		d. financial

Question 50

1.25 points

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What are the characteristics of my customers . . . their ages, education levels, income, gender, marital status, and other features?" Questions such as these address which type of marketing information?

[removed]		a. geographic
[removed]		b. demographic
[removed]		c. psychographic
[removed]		d. monolithic

Question 51

1.25 points

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Quick assets include assets that can be converted into cash rapidly. The simplest formula for determining quick assets is:

[removed]		a. current assets - current liabilities
[removed]		b. current assets - inventory
[removed]		c. total assets - total liabilities
[removed]		d. total assets - fixed assets

Question 52

1.25 points

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Quantitative data from the entrepreneur's market research form the basis of the financial projections throughout the business plan.

[removed]	True
[removed]	False

Question 53

1.25 points

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Inventory represents the largest investment for most businesses.

[removed]	True
[removed]	False

Question 54

1.25 points

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__________ is any commercial news covered by the media that boost sales but for which the small business does not pay.

[removed]		a. Publicity
[removed]		b. Personal selling
[removed]		c. Advertising
[removed]		d. Promotion

Question 55

1.25 points

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Approximately __________ percent of industrial and wholesale sales are on credit

[removed]		a. 40
[removed]		b. 55
[removed]		c. 70
[removed]		d. 90

Question 56

1.25 points

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The __________ ratio measures the percentage of a company's sales that remains as profit after paying all of its expenses.

[removed]		a. current
[removed]		b. quick
[removed]		c. net profit on sales
[removed]		d. net profit to equity

Question 57

1.25 points

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__________ is the total number of people exposed to an ad at least once over a period of time, usually four weeks.

[removed]		a. Audience
[removed]		b. Reach
[removed]		c. Cost per thousand
[removed]		d. Frequency

Question 58

1.25 points

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Companies selling high-tech products such as computers and cellular phones often rely on a __________ pricing strategy in which they initially establish a high price for a product and then, as technological advancements lower their costs, push its price down, preferably ahead of the competition.

[removed]		a. penetration
[removed]		b. skimming
[removed]		c. sliding down the demand curve
[removed]		d. cyclical

Question 59

1.25 points

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Which factor do Americans rank as the most important determinant of "quality"?

[removed]		a. low price
[removed]		b. reliability (average time between failures)
[removed]		c. durability (how long it lasts)
[removed]		d. ease of use

Question 60

1.25 points

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The most common channel of distribution for consumer goods is:

[removed]		a. manufacturer to consumer
[removed]		b. manufacturer to retailer to consumer
[removed]		c. manufacturer to wholesaler to retailer to consumer
[removed]		d. none of the above

Question 61

1.25 points

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Which of the following statements concerning pricing is true?

[removed]		a. When setting prices, small business owners must track competitors' prices on similar or identical products and services and so they can either match them or beat them.
[removed]		b. For small companies, especially those competing against large businesses, offering lower prices is the best way to gain a competitive advantage.
[removed]		c. The prices business owners set for their companies' goods and services send clear signals to customers about quality, value, and image.
[removed]		d. All of the above.

Question 62

1.25 points

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Proving that a profitable market exists involves two steps:

[removed]		a. showing customers exist and documenting their buying power.
[removed]		b. showing customers are interested and documenting market claims.
[removed]		c. showing customer demographics and documenting the buying cycle.
[removed]		d. showing customer locations and documenting their average income.

Question 63

1.25 points

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Although banner ads produce a click-through rate of just __________ percent, they remain a popular form of advertising on the World Wide Web

[removed]		a. less than 10
[removed]		b. 10 to 25
[removed]		c. 25 to 50
[removed]		d. more than 50

Question 64

1.25 points

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For entrepreneurs, a business plan is:

[removed]		a. a systematic, realistic evaluation of a business venture's chances for success in the market.
[removed]		b. a way to determine the principal risks facing a venture.
[removed]		c. a road map on the journey toward building a successful business.
[removed]		d. an important tool for attracting capital in the challenging hunt for money
[removed]		e. All of the above

Question 65

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The probability of collecting an outstanding account receivable __________ the longer the account remains outstanding.

[removed]		a. increases
[removed]		b. decreases
[removed]		c. remains constant
[removed]		d. none of the above

Question 66

1.25 points

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Annette Tosca is planning to launch a retail gift store and has been busy gathering financial information for her business plan. If Annette knows that the net profit margin for the typical gift store is 6.3 percent, what sales level must she achieve to reach her target net income of $28,000?

[removed]		a. $29,882
[removed]		b. $176,400
[removed]		c. $204,400
[removed]		d. $444,444

Question 67

1.25 points

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Stop 'N Shop, a small convenience store, is running a special sale on candy bars from a particular maker. The candy bars normally sell for 50 cents each, but Stop 'N Shop is pricing them at "4 for $1.75" for a limited time. Stop 'N Shop is using which pricing technique?

[removed]		a. zone pricing
[removed]		b. price lining
[removed]		c. multiple pricing
[removed]		d. cash discount

Question 68

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A company should always ______ receivables and ______ payables.

[removed]		a. accelerate; stretch out
[removed]		b. stretch out; accelerate
[removed]		c. accelerate; accelerate
[removed]		d. stretch out; stretch out

Question 69

1.25 points

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The __________ ratio measures the owners' rate of return on their investment in the business.

[removed]		a. current
[removed]		b. quick
[removed]		c. net profit on sales
[removed]		d. net profit to equity

Question 70

1.25 points

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Which of the following ratios tells business owners how fast merchandise is moving through their companies?

[removed]		a. quick ratio
[removed]		b. average collection period ratio
[removed]		c. average inventory turnover ratio
[removed]		d. net profit to equity

Question 71

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A small music store sets the prices of most of its CDs at three levels: $12.99, $14.99, and $16.99, even using brightly-colored labels to indicate each price level. This music store is using:

[removed]		a. leader pricing
[removed]		b. price lining
[removed]		c. uniform delivered pricing
[removed]		d. bundling

Question 72

1.25 points

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The owner of a small dry cleaners sponsored a community event in which he offered to take in winter coats donated by customers, clean them at no cost, and then distribute them to the needy through a local charity dedicated to helping needy people in the community. This business owner was using:

[removed]		a. cooperative advertising
[removed]		b. cause marketing
[removed]		c. shared advertising
[removed]		d. event relations

Question 73

1.25 points

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Breakeven volume equals:

[removed]		a. Total Variable Costs / (Sales Price per Unit - Variable Costs per Unit)
[removed]		b. Total Fixed Costs / (Sales Price per Unit - Variable Costs per Unit)
[removed]		c. Fixed Costs per Unit / (Sales Price per Unit - Variable Costs per Unit)
[removed]		d. Variable Costs per Unit / (Sales Price per Unit - Fixed Costs per Unit)

Question 74

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Studies show that businesses typically waste __________ percent of the time it takes to produce products and services without ever realizing it.

[removed]		a. 10 to 20
[removed]		b. 35 to 50
[removed]		c. 65 to 80
[removed]		d. 85 to 99

Question 75

1.25 points

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__________ are a form of World Wide Web advertising that involves attaching a small program to users' computers whenever they visit a Web site which creates an electronic footprint of users and sends pop-up ads that would be of interest to them.

[removed]		a. Banner ads
[removed]		b. Push technology ads
[removed]		c. Cookies
[removed]		d. Full-page ads

Question 76

1.25 points

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One extensive study of salespeople found that __________ percent of all salespeople have the ability to sell and are selling the "right" product or service.

[removed]		a. 20
[removed]		b. 40
[removed]		c. 60
[removed]		d. 80

Question 77

1.25 points

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Most "bounced" checks occur because:

[removed]		a. of fraud.
[removed]		b. nine out of ten customers fail to keep their checkbooks balanced.
[removed]		c. of bank errors.
[removed]		d. none of the above.

Question 78

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About 20 percent of the typical company's customers account for about __________ percent of its sales.

[removed]		a. 20
[removed]		b. 50
[removed]		c. 65
[removed]		d. 80

Question 79

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Numerous customer surveys across a variety of industries show that ___________ is the most important element of service.

[removed]		a. the personal touch businesses offer them
[removed]		b. technology
[removed]		c. convenience
[removed]		d. quality

Question 80

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A company whose sales are equal to the breakeven sales will earn:

[removed]		a. a loss.
[removed]		b. neither a loss nor a profit.
[removed]		c. a profit.
[removed]		d. Cannot say from the information given.

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