Question: Your new venture just received a term sheet from a venture capital firm you presented your business plan to. In it you notice that the

Your new venture just received a term sheet from a venture capital firm you presented your business plan to. In it you notice that the VC firm has a 1x liquidation preference. What does this imply if you take the VC financing now and the venture is eventually sold without an increase in value from the time of this financing?

Group of answer choices

The VC can insist that your company maintains twice the normal quick ratio

It is not important

If the firm fails, the entrepreneurs will need to pay the difference from their own personal assets

The company's current assets must be greater than its fixed assets

The VC will receive its full investment in your company before founders receive anything

When a firm is in financial distress and faces balance sheet insolvency what is the underlying problem?

Group of answer choices

The firm's net income is growing too fast

The firms equity exceeds its debt

The firm's total debt exceeds its total assets

The firm's cash balance is increasing

All of these are problems

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