$1.$ Which question is not addressed by the financial plan?

A$.$ How financially attractive is the venture?

B$.$ When will the venture need to raise money?

C$.$ Who will provide money to the venture?

D$.$A timeline with milestones

E$.$None of the above

$2.$ A venture$$s funding needs can be gleaned from:

A$.$ the income statement

B$.$ the cash flow statement

C$.$ the balance sheet

D$.$ neither of them

$3.$ Milestones are:

A$.$ events when the venture raises new a funding round

B$.$ events that reveal important information about the venture

C$.$ events that confirm the predictions of the financial projections

D$.$ either of them

$4.$ An appropriate reporting frequency in financial projections:

A$.$ decreases with longer time horizons

B$.$ is always equal to five years

C$.$ should be quarterly at any time horizon

D$.$ should be monthly at any time horizon

$5.$ The bottom$-$up approach to financial projection reflects a:

A$.$ a supply$-$side logic anchored on the venture$$s ability to produce and sell

B$.$ a demand$-$side logic anchored on the potential size of the market

C$.$ a supply$-$side logic anchored on the entrepreneur$$s own set goals

D$.$ none of the above

$6.$ Which type of expenditures pose a bigger challenge for a venture$$s business model,

fixed or variable costs?

A$.$ Variable costs, because they can easily escalate to a large number

B$.$ Fixed costs, because they need to be paid upfront

C$.$Fixed costs, because they cannot be reduced by scaling up operations

D$.$Variable costs, because they need to be paid upfront

$7.$ The Cost of Goods Sold $($COGS$)$ are typically larger:

A$.$ in manufacturing

B$.$ in services

C$.$ in non$-$profit operations

D$.$ none of the above

$8.$ When use top$-$down approach to estimate demand for a new product developed by your venture,

A$.$ you need to estimate the demand for the first year and then use a fixed growth rate to project the demand for years after

B $.$you need to identify the target market size and estimate your market share

C$.$ you need to estimate your production capacity

D$.$All of the above

$9.$ Why is it difficult to estimate the Cost of Goods Sold $($COGS$)$ with the top$-$down

approach?

A$.$ Unit production costs are not disclosed by established producers

B$.$ Unit production costs may vary with scale, so costs for established producers

may be lower than for a new venture

C$.$ COGS include fixed costs that are difficult to estimate based on other companies$$

Reports

D$.$ All of the above

$10.$ R&D costs are typically more sizeable than interest expenses for start$-$ups because:

A$.$ R&D is very expensive as it requires both scientists and costly equipment

B$.$interest rates are low

C$.$ start$-$ups rely more on equity than on debt financing

D$.$interest rates are high

$11.$ The $$payback date$$ identified by financial projections:

A$.$ occurs when net income reaches zero and is about to become positive

B$.$ occurs when cash flow reaches zero and is about to become positive

C$.$ occurs when a venture$$s cash balance reaches zero and is about to become positive

D$.$ none of the above

$12.$ The $$break even date$$ identified by financial projections:

A$.$ occurs when revenues just cover total costs

B$.$ net income becomes large enough to cover the increase in net working capital and

in capital expenditures $($net of depreciation$)$

C$.$occurs when a venture$$s cash balance reaches zero and is about to become

Positive

D$.$ none of the above

$13.$ The total financing needs of a venture:

A$.$ are an assumption of the financial projections

B$.$ are an assumption made by the entrepreneur to make the financial plan useful

C$.$are derived from financial projections and are key inputs for the financial plan

D$.$are chosen as an objective by the investor

$14.$ Which of the following would be an example of an investing activity on the cash$-$flow statement?

A$.$Purchase of equipment

B$.$Sales and costs of the company

C$.$Payment of a dividend

D$.$Sales of new securities

$15.$ What is the reason that not all sales revenues are in cash?

A$.$Not all sales are final

B$.$Customers can purchase on account

C$.$Expenses must be taken into account

D$.$Loan proceeds must also be considered

$16.$ Suppose a startup has $$20,000$ cash reserve. In the first month of operating, its revenue is $$10,000,$ and its cash outflow is $$15,000.$ What is the $($net$)$ burn rate for the first month? What is the cash runway?

A$.$$$15,000$; $4$ months

B$.$$$10,000$; $2$ months

C$.$$$5000$; $4$ months

D$.$$$20,000$; $1$ month

$17.$ Applying signaling theory into the context of new venture funding, which of the following statement is correct?

A$.$The information about the potential of the new venture opportunity is asymmetric between entrepreneurs and investors such that the former know more about the opportunities than the latter

B$.$Entrepreneurs can deal with this information asymmetry using $$signaling$$ strategies such as the promise of initial sales or financial projections

C$.$Investors can deal with this problem using $$screening$$ strategies by offering menu of options such that entrepreneurs reveal their type by self$-$selecting into different categories.

D$.$All of the above