Q&A Hero

Q: What are some of the warning signs of bankruptcy?

Q: Identify and define the three major types of bankruptcy.

Q: Explain the advantages and disadvantages of an ESOP.

Q: List the critical factors that an effective succession plan needs to consider.

Q: From the chapter on the characteristics of an entrepreneur, we know that after the failure of a business entrepreneurs are likely to: A.continue starting new ventures. B.look for a position working for someone else. C.go to work for the government. D.try again and fail.

Q: Given the cultural climate of the U.S., business failure and bankruptcy: A.mean the entrepreneur can never hope to start over. B.carry such a stigma that the entrepreneur is disgraced and ostracized. C.do not have to be the end for the entrepreneur. D.means that there would be a change in the outlook of the people.

Q: The early signs of bankruptcy include all of the following except: A.key personnel leave the company. B.payroll taxes are not paid. C.suppliers demand payment in cash. D.all of these are early signs of bankruptcy.

Q: The early signs of bankruptcy are most often: A.apparent to the entrepreneur. B.interrelated. C.occur in isolated instances. D.unavoidable.

Q: Stress points are a result of all of the following except: A.sales. B.the need for new key personnel. C.major capital investment. D.lack of time.

Q: The most severe form of bankruptcy is: A.Chapter 7. B.Chapter 11. C.Chapter 13. D.prepackaged bankruptcy.

Q: (p.424-425)Suggestions for surviving bankruptcy include all of the following except: A.focus efforts on preparing a realistic reorganization plan. B.understand how protection against creditors works. C.file only after cash runs out. D.maintain good records.

Q: When the debt is prorated to the creditors as a settlement in Chapter 11 this is called: A.Substitution. B.Evolution. C.Extension. D.Composition settlement.

Q: This occurs when two or more of the largest creditors agree to postpone any claims, acting as stimulus for smaller creditors to also agree to the plan. A.Extension. B.Evolution. C.Substitution. D.Composition settlement.

Q: A common reason why companies do not come out successfully from a Chapter 11 bankruptcy is because they ____. A.are in denial B.don't have legal representation C.wait too long to file for protection D.do not understand the bankruptcy process

Q: Exchanging stock or something else for existing debt under Chapter 11 bankruptcy is called: A.amendment. B.extension. C.composition settlement. D.substitution.

Q: (p.423-426)Which methods of bankruptcy require the entrepreneur to come up with a payment plan? A.Chapters 11 and 13 B.Chapters 7 and 11 C.Chapters 7 and 13 D.Chapters 7, 11, and 13

Q: Chapter 11 is the type of bankruptcy that results in: A.extended time payments. B.liquidation. C.reorganization. D.turn around time.

Q: Which of the following is not a purpose of the Bankruptcy Act of 1978? A.ensure a fair distribution of assets to creditors. B.protect debtors from unfair depletion of assets. C.protect debtors from unfair demands by creditors. D.protect creditors from undue delay of money.

Q: The majority of bankruptcies are: A.corporate bankruptcies. B.partnership bankruptcies. C.S Corporation bankruptcies. D.individual bankruptcies.

Q: In 2014 both business and non-business bankruptcy filings were: A.Below 1 million B.About 1 million C.About 1.5 million D.More than 2 million

Q: According to the Small Business Administration, the failure rate of new businesses within the first few years is: A.less than 25%. B.about 70%. C.50%. D.about 33%.

Q: All of the following are benefits of an ESOP except: A.the company can deduct contributions to an ESOP. B.it offers a planned exit in writing. C.it offers a unique incentive to employees. D.it is relatively simple to establish.

Q: ESOPs account for ____ of the nation's 10 million employees. A.15% B.35% C.40% D.50%

Q: Currently ESOPs account for ____ of the private sector workforce. A.5% B.10% C.15% D.20%

Q: A two to three year plan to sell a business to employees is: A.an ESOP. B.an acquisition. C.succession. D.the most popular method of exit.

Q: An ESOP: A.is a device to transfer the business to a small group of key loyal employees. B.eliminates the need to perform a complete valuation of the venture. C.motivates employees because they realize they are working for themselves. D.removes the need for a continuous performance appraisal.

Q: The most common method of harvesting a venture is through: A.direct sale of the business. B.an IPO. C.liquidation. D.employee stock ownership program.

Q: The Family Business Institute indicates that about ___ percent of successful ventures make it to the second generation of ownership. A.40 B.20 C.30 D.10

Q: Which of the following is not an important part of a succession plan? A.estimate the firm's value B.evaluate potential successors based on how similar they are to you C.provide a transition period so the successor can learn the business D.set a date for completion of the transition and stick to it

Q: Around ____ of businesses make it to the third generation. A.5% B.12% C.30% D.60%

Q: Which of the following is not an exit strategy? A.an IPO B.a private sale of stock C.liquidation D.franchising

Q: The best management style for a manager undertaking a business turnaround is a bunker mentality.

Q: When a venture is in trouble and facing bankruptcy, the entrepreneur should first sit down with his or her spouse and explain what is happening.

Q: When business failure looks probable, the entrepreneur should seek outside advice.

Q: If an entrepreneur recognizes the warning signs of bankruptcy early, he or she may be able to prevent it from occurring.

Q: Cash flow is one of the major causes for an entrepreneur to have to declare bankruptcy.

Q: Bankruptcy should be a last resort for the entrepreneur.

Q: Under Chapter 13, meeting with groups of creditors to amicably solve issues is usually a good idea.

Q: Under Chapter 13, the key to enhancing the bankruptcy process is by stressing the significance of the creditors' support during the process.

Q: Because it is so severe, Chapter 7 must always be voluntary.

Q: Chapter 7 is the most severe alternative in bankruptcy.

Q: It is best for the entrepreneur to have any litigation in existence transferred to the bankruptcy court.

Q: Bankruptcy can be used as a bargaining chip with creditors to allow the venture to voluntarily reorganize.

Q: All bankruptcies are handled by the U.S. Supreme Court.

Q: More than 50 percent of firms filing for Chapter 11 bankruptcy emerge from the process.

Q: The Bankruptcy Act of 1978 was designed to protect creditors from receiving nothing in bankruptcy.

Q: Bankruptcy protects entrepreneurs from creditors and competitors.

Q: Chapter 11 bankruptcy allows a firm to reorganize and prepare strategies to improve future profits.

Q: The bankruptcy type that is most common is Chapter 7 bankruptcy.

Q: Since 2010 the number of business filings for bankruptcy has steadily increased each year.

Q: The majority of bankruptcies are mid-size businesses.

Q: About one third of all new start-ups fail in their first years.

Q: In establishing a price for a management buyout the entrepreneur should not include the goodwill value established from past revenue because it can't be quantified.

Q: A "management buyout" is the same thing as an "ESOP."

Q: One advantage of an ESOP is that it is easy to establish.

Q: One advantage of an ESOP is that the company can obtain a tax benefit by deducting ESOP contributions.

Q: Presently there are about 11,500 ESOP companies in the United States.

Q: ESOPs account for about 20% of the nation's 10 million employees.

Q: One key advantage of an ESOP is that it enhances employee motivation.

Q: An ESOP is five to six year plan to sell a business to its employees.

Q: An employee stock option plan establishes a new legal entity.

Q: It is common for a buyer to purchase a business using notes based on future profits.

Q: A business, when it comes to selling, will be less valuable if it is on a narrow, well-defined segment.

Q: An effective succession plan should be communicated only to top management and not all employees.

Q: The Family Business Institute indicates that about 12 percent of successful ventures survive into the third generation of ownership.

Q: Passing the business to an employee ensures the new principal is familiar with the business and the market.

Q: Only 60% of businesses have a succession plan in place.

Q: About 50 percent of family firms successfully make the transition to the second generation.

Q: The sale of the company to employees is an exit strategy.

Q: In regards to negotiation, define the following: distribution task, integration task and reservation price.

Q: Identify and describe the three different types of franchises.

Q: What are the main benefits (to the franchisee) of franchising?

Q: Discuss the main advantages of an acquisition.

Q: Discuss the main disadvantages of an acquisition.

Q: What are the 4 major factors in joint venture success?

Q: Explain the potential issues that could occur in establishing an international joint venture.

Q: Which is not a strategy that is used to elicit information about the other party in a negotiation?A.Take up a new negotiation at the end of the first.B.Ask lots of questions.C.Make multiple offers simultaneously.D.Build trust and share information.

Q: The __________ is the range of outcomes between the entrepreneur's reservation price and the reservation price of the other party. A.reservation price B.franchise price C.bargaining zone D.break even price

Q: The __________ is the price at which the entrepreneur is indifferent about whether to accept the agreement or choose an alternative. A.break even price B.franchise price C.bargaining zone D.reservation price

Q: The integrative aspect of negotiation: A.focuses on decreasing the "size of the pie." B.is more beneficial than a conflict resolution approach. C.requires the entrepreneur to lower the reservation price. D.requires the negotiator to not decrease the price and not back down.