Midterm1 Questions

Midterm1 Questions - QUESTIONS FOR CHAPTER ONE 1) What is...

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QUESTIONS FOR CHAPTER ONE 1) What is meant by a “Mom and Pop” form of organization? How does this contrast with a “functional management” form of organization? What is “wrong” with a Mom and Pop organization? 2) If there are two types of start-ups, an “Innovative” one and a start-up in an established industry, why is it important to have a really big gross profit in an innovative start-up? 3) When it comes to market size, what is the problem associated with “proving out the market”? If your company proves out a market, to be viable, what will happen when a big competitor comes into the market? Why is market research so important in doing a start-up? 4) How can a start-up minimize the “sunk capital” that the start-up would otherwise take? 5) What’s wrong with a “one product” firm? 6) What is meant by “capable of an “out”? 7) There are two ways to give an investor an “out”. What are they? Which one would a venture capitalist prefer? 8) Is there such a thing as a “too simple product”? 9) What is wrong with attempting to promote a new company based on last year’s (or a prior year’s) good idea? 10) Why is it important to be able to explain a proposed deal in simple terms? 11) Is it better to have a group in charge of management or a single individual? 12) What is meant by a person’s “track record”?
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QUESTIONS FOR CHAPTER TWO 1) Why is it important to limit the length of the Package to a “reasonable” length? 2) How much should you say about the product? 3) Is it a good idea to patent the idea before you look for funding? 4) When writing about the marketing of the product (or whatever it is) what is most important? 5) What is meant by having a “pain pill” instead of a “vitamin” for an idea? 6) In a relatively “plain vanilla” idea, how can you calculate how much equity to give up for the money requested? 7) How can you determine how much cash the new company will need to start and then get to a cash flow break even point? 8) What does the author mean by “sequencing” the financing? 9) Why does the author suggest that you fund the proposal for all it needs at the start of the proposal? (This is called a fully funded proposal.) 10) Why is it important for each item on the three statements to be footnoted? 11) Unless it is a high tech deal, why does the author feel that a “shopped deal” is “no deal”? 12) In a high tech proposal, what are the sequences of financing that might occur? 13) How does the author suggest you approach a source of capital?
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QUESTIONS FOR CHAPTER THREE 1) Briefly discuss the significance of showing ROI by the duPont method. 2) For companies that are not service companies, what is the most popular way of “managing the companies’ profit”? 3) Why is said that FIFO can create “artificial profits”?
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This note was uploaded on 10/15/2008 for the course FINANCE 453 taught by Professor Capper during the Fall '08 term at CSU Fullerton.

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Midterm1 Questions - QUESTIONS FOR CHAPTER ONE 1) What is...

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