Reference no: EM13921660

Q1. "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?
a. geographic
b. demographic
c. psychographic
d. monolithic

Q2. The price range for a product or service is:
a. the final price a business owner establishes for a product or service, taking into account the company's desired image in the market.
b. a function of a single factor: the prices competitors set for similar goods and services.
c. the area between the price ceiling defined by customers in the market and the price floor defined by a company's cost structure.
d. the area between the price floor set by a company's cost structure and the price ceiling determined by the prices competitors set for similar goods and services.

Q3. To calculate the breakeven point, a business owner should use which of the following formulas?
a. total variable expenses / contribution margin as a percentage of sales
b. total fixed expenses / contribution margin as a percentage of sales
c. (total revenue - total expenses) / total revenue
d. contribution margin as a percentage of sales / total expenses

Q4. Proving that a profitable market exists involves two steps:
a. showing customers exist and documenting their buying power.
b. showing customers are interested and documenting market claims.
c. showing customer demographics and documenting the buying cycle.
d. showing customer locations and documenting their average income.

Q5. __________ ratios tell whether a small business will be able to meet its maturing obligations as they come due.
a. liquidity
b. leverage
c. operating
d. profitability

Q6. The worst mistake entrepreneurs make when defining the marketing strategy for their companies is:
a. being overly specific when defining the target customers at whom they are aiming their products and services.
b. budgeting an excessive amount of money for marketing and advertising.
c. overwhelming potential lenders and investors with an excessive amount of detail about their marketing targets and strategies.
d. failing to define their target market clearly and trying to make their businesses "everything to everybody."

Q7. In __________ advertising, a manufacturing company shares the cost of advertising with a small retailer if the retailer features its products in those ads.
a. cause
b. shared
c. cooperative
d. conjunctive

Q8. In the __________ stage of the product life cycle, sales volume continues to rise, but profit margins peak and then begin to decline as competitors enter the market.
a. growth and acceptance
b. maturity
c. saturation
d. decline

Q9. The "big three" of cash management are:
a. sales, accounts receivable, and accounts payable
b. sales, inventory, and net income
c. inventory, accounts payable, and accounts receivable
d. accounts payable, accounts receivable, and sales

Q10. An effective market analysis in a business plan should include:
a. a clear definition of the company's target market.
b. the types of advertising and promotional campaigns that will reach the intended audience most effectively and efficiently.
c. market size and trends.
d. all of the above.

Q11. Ohmae Tanuchi, owner of Times Past, a small company selling clocks, knows that one of her best-selling clocks cost her $93.75 each. If Ohmae wants a markup (of retail price) on this clock to be 55 percent, what final selling price should she establish?
a. $135.94
b. $145.31
c. $170.45
d. $208.33

Q12. The __________ ratio expresses the relationship between the capital contributions to a company from its creditors and those of its owners; it measures what a business "owes" to what it "owns."
a. current
b. debt
c. debt to net worth
d. times interest earned

Q13. __________ is any sales presentation that is nonpersonal in nature and is paid for by an identified sponsor.
a. publicity
b. personal selling
c. advertising
d. promotion

Q14. A business plan:
a. should be at least 50 pages long to prove to potential lenders and investors that an entrepreneur has researched the business opportunity thoroughly.
b. should follow a standard format so that potential lenders and investors know where to find what they are looking for.
c. does not guarantee success, but it does improve the chance of succeeding.
d. all of the above

Q15. Approximately __________ percent of the average company's sales come from existing customers.
a. 20
b. 40
c. 50
d. 70

Q16. 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?
a. zone pricing
b. price lining
c. multiple pricing
d. cash discount

Q17. Paulette Sanchez has just received an invoice for merchandise she purchased from one of her company's suppliers. The invoice is for $1,892.78 and includes "2/10, net 30" terms, which mean that:
a. Paulette must pay the invoice within 30 days; otherwise, she will incur a 2 percent penalty for every 10 days the bill is past due.
b. Paulette must pay 2 percent of the invoice ($37.86) within 10 days and must pay the remaining balance within 30 days.
c. Paulette can pay just $1,854.92 if she pays the invoice within 10 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.
d. Paulette can pay just $1,703.50 if she pays the invoice within 2 days; otherwise, the full invoice ($1, 892.78) is due within 30 days.

Q18. The __________ takes a "snapshot" of a business, giving the owner an estimate of the company's worth as of a given date.
a. income statement
b. balance sheet
c. statement of cash flows
d. debt ratio

Q19. Approximately __________ percent of industrial and wholesale sales are on credit
a. 40
b. 55
c. 70
d. 90

Q20. A company's contribution margin is:
a. the portion of total revenue that remains after covering fixed costs to contribute toward meeting variable expenses and earning a profit.
b. the difference between sales revenue and total fixed expenses.
c. the portion of total revenue that remains after covering variable costs to contribute toward meeting fixed expenses and earning a profit.
d. the difference between sales revenue and variable expenses.

Q21. Customers use credit cards to pay for __________ out of every $100 spent on consumable goods and services.
a. $12
b. $28
c. $41
d. $52

Q22. When a customer's account becomes past due, a business owner should:
a. not bother the customer over the past due bill, even if it is a sizeable one, for fear of alienating the customer and losing him or her forever.
b. take immediate action in the form of either a letter or a telephone call that serves as a polite reminder that the bill is due and asks for payment.
c. immediately turn the account over to a collection agency.
d. call the "deadbeat" customer and threaten to ruin his or her credit by telling the customer's other suppliers about the past due account.

Q23. 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.
a. reality
b. competitive
c. value
d. financial

Q24. Cash is the most important but least productive asset the small business has.
a. true
b. false

Q25. The first and most important function a business plan serves is:
a. guiding a startup company's operations by charting its future course and devising a strategy for following it.
b. attracting money from lenders and investors.
c. convincing suppliers to sell to a startup company on credit.
d. to attract customers and clients who otherwise would not consider doing business with a startup company.

Q26. A(n) __________ is an arrangement with a company's bank in which the bank maintains a post office box near the company's key customers; several times each day, the bank collects payments those customers send to the post office box and deposit them immediately into an interest-bearing account for the company.
a. sweep account
b. zero balance account
c. lockbox
d. automatic stay

Q27. Vern Schlichter, owner of The Import Shop, a garage specializing in foreign auto repairs wants to make sure that the hourly price he charges for his company's repair service will cover his costs and generate the desired profit. Using his most recent income statement, Vern estimates that he and his employees spent 8,465 hours repairing cars at a total cost (excluding parts) of $281,461. If Vern's target net profit margin is 20 percent, what price per hour should he set for labor (excluding parts)?
a. $26.60
b. $39.89
c. $41.56
d. $166.25

Q28. 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?
a. geographic
b. demographic
c. psychographic
d. monolithic

Q29. One study found that __________ percent of small business owners analyzed their companies' financial statements as part of the managerial planning and decision making process.
a. 11
b. 21
c. 36
d. 48

Q30. The __________ is the first section in a business plan, but it is the last section to be written.
a. company history
b. list of goals and objectives
c. marketing strategy
d. executive summary

Q31. __________ define(s) where an entrepreneurs wants to take her business; __________ address(es) the question of how to get there.
a. Strategy; goals and objectives
b. Vision; goals and objectives
c. Goals and objectives; strategy
d. Strategy; vision

Q32. 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?
a. $29,882
b. $176,400
c. $204,400
d. $444,444

Q33. 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.
a. 10 to 15
b. 25 to 30
c. 35 to 40
d. 50 to 55

Q34. Which one of the "five C's of credit" is a synonym for cash flow?
a. capacity
b. collateral
c. conditions
d. capital

Q35. Many creditors look for a times interest earned ratio of at least _____ before pronouncing a company a good credit risk.
a. 1:1
b. 2.5:1
c. 4:1
d. 10:1

Q36. Studies show that businesses typically waste __________ percent of the time it takes to produce products and services without ever realizing it.
a. 10 to 20
b. 35 to 50
c. 65 to 80
d. 85 to 99

Q37. To get external financing, every business plan must pass three tests. The __________ test involves proving to lenders and investors that the business offers a high probability of repayment or an attractive rate of return.
a. reality
b. competitive
c. value
d. market

Q38. The __________ ratio measures the owners' rate of return on their investment in the business.
a. current
b. quick
c. net profit on sales
d. net profit to equity

Q39. A __________ pricing strategy for a new product or service maintains a relatively low profit margin so that a company can gain its quick acceptance into the market and quickly achieve a high volume of sales.
a. penetration
b. skimming
c. sliding down the demand curve
d. cyclical

Q40. 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?

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

Q41. When describing the company's products or services in a business plan, entrepreneurs should focus on the product's or service's:

a. features
b. price
c. benefits
d. physical characteristics

Q42. The __________ ratio measures the percentage of a company's sales that remains as profit after paying all of its expenses.

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

Q43. 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?

a. 33%
b. 25%
c. 27%
d. 75%

Q44. A survey by the Yellow Pages Publishers Association found that _____ percent of businesses had received bogus bills for Yellow Pages advertising.

a. 20
b. 33
c. 50
d. 80

Q45. High prices and low perceived quality create a(n) ______ image.

a. contradictory
b. upscale
c. bargain
d. value

Q46. 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:

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

Q47. The two-thirds rule says that:

a. only two-thirds of the entrepreneurs with a viable business venture will find financial backing.
b. of those entrepreneurs who get financing will get just two-thirds of what they initially requested.
c. getting the financing to start a business will take entrepreneurs two-thirds longer than they expected.
d. all of the above

Q48. Small businesses should maintain a current ratio of at least:

a. 1:1
b. 2:1
c. 4:1
d. 10:1

Q49. The executive summary section of a business plan:

a. presents a synopsis of the business plan.
b. is a written version of the entrepreneur?s "elevator pitch."
c. must capture the reader's attention so that he or she will read the rest of the plan.
d. All of the above.

Q50. Quick assets include assets that can be converted into cash rapidly. The simplest formula for determining quick assets is:

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