check your understanding 6

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1. What are the benefits of the budgeting process?

2. Describe how an operating budget is constructed.

3. Describe how a cash-flow budget is constructed.

4. Describe how a capital budget is constructed.

5. What is a ratio analysis? How is horizontal analysis different from vertical analysis?

6. What is a business plan?

7. Describe each of the five planning pitfalls entrepreneurs often encounter.

8. Identify the benefits of a business plan (a) for an entrepreneur and (b) for financial sources.

9. Briefly describe each of the major segments to be covered in a business plan.

10. Outline some of the critical points to capture in an elevator pitch.