BUSN-3710: Entrepreneurial Financial Management Mid-Term Exercises

This assignment solution for Entrepreneurial Financial Management covers various aspects of entrepreneurial finance. It begins by outlining the key activities in entrepreneurial financial management and their importance, differentiating it from traditional finance, and clarifying the distinction between wealth and income. The solution delves into the components of a business plan, and explains how net income impacts the balance sheet. The assignment also explores the roles of income statements and balance sheets in communicating business performance, defining assets, liabilities, and owner's equity. Furthermore, it discusses revenue and cash flow, the importance of linking marketing plans to financial forecasts, and different types of costs like fixed, variable, and semi-variable costs. It also examines the relationship between sales revenue and profit, break-even analysis, and the financial considerations for service and seasonal companies. The solution further clarifies the difference between cash flow and revenue, and general and administrative expenses. Finally, the assignment highlights the importance of earnings before interest and taxes (EBIT), working capital, and determining the necessary funds for a start-up company.

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Entrepreneurial Financial Management
Student’s Name
Institutional Affiliation
Instructor’s Name
Date

ENTREPRENEURIAL FINANCIAL MANAGEMENT 2
Entrepreneurial Financial Management
Group I
1. As an entrepreneur one has to track his business through; maintaining fixed deadlines,
monitoring spending, following a created budget, maintaining a good inventory,
maximizing revenues and keeping a cash reserve. The primary importance of the
above is to keep track of all the business performance.
2. Entrepreneurial finance is similar to finance in that they both deal with finances; the
difference lies in the fact that in entrepreneurial finance, both investing and financial
decisions are identical.
3. While wealth is the combination of amassed assets and money income is the revenue
obtained from a business enterprise. Businesses have revenues and thus, it is essential
for an entrepreneur.
4. A good business plan contains the name of the company, a brief description of the
business activity, a budget to begin the business and finally a projected revenue from
the business
Group II
1. Income affects a balance sheet as the profits or losses from the income statement are
added to the balance sheet.
2. An income statement shows the revenues and expenses and thus states if the business
is making a loss or a profit. The income statement will be linked to the balance sheet
by taking the income statement balance and adding it to the balance sheet.

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3. A balance sheet is a statement of the financial position of the company showing the
relationship between assets liabilities and capital relation in the business.
4. Assets are either they are the resources used by a business for its productivity; it
includes the land, building and machinery (Li, Sheng, & Sun, 2017, April). The
liabilities are the expenses or those finances the company has obtained elsewhere and
thus is indebted to pay them. The owner’s equity is the amount that the owner of the
business contributes at the start of the business.
5. Revenues are the output resulting from sales in a business setup. The proceeds from
sales. The expenses, on the contrary, are the amounts that the business spends in the
process of performing various duties they include employee wages and production
costs.
Group III
1. Hockey stick growth is a curve that shows that a business will begin from a small, simple
background and starts improving exponentially after some time. It tells entrepreneurs do
expect fewer returns as the business is beginning, and it will grow to a much better later.
2. Creating scenarios is valuable for any business as it increases the performance of the
production in several ways; it also helps in predicting the possible future outcomes.
3. Revenue is the amount obtained from sales of products while cashflows are the flow of
cash into and out of business (Weber, 2019). It is important to distinguish the two as it
may be confusing to differentiate. Cashflow can be calculated by adding net income and
depreciation then subtracting both changes in working capital and expenditure.

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4. Linking a marketing plan to the financial forecast helps in the achievement of targets. If
one fails to link the two, the production may fail to meet its market targets.
5. Mortison makes toys, and for seven months, there are 210 days each day, Mortison
produces 14,250 toys. In 210 days, it will produce 2,992,500. Selling each at 35 cents
will give revenue of 104,737,500. Making a total of $1,047,375.
6. Extron sells electronics. 1 device equals $1050; quota is at 40. 3 employees hit 50% thus
3 employees sell 20 units each accumulating to 60 units in total. Two employees hit 75%
resulting in 30 each totalling to 60. Five individuals reach a target of 40, resulting in 200
units the total = 320. Total revenue will be $336,000
Group IV
1. The three types of costs include fixed cost, variable cost and semi-variable costs.
2. The relationship between sales revenues and profit is that the higher the sales, the higher
to the profit.
3. The advantage of knowing the break-even point is to ensure that one does not operate
below this level if they are to make a profit.
4. A service company will have fewer expenses compared to a company that has recurring
revenue. Since the expenses of the recurring company will be much more fixed and
increasing as productivity increases.
5. A seasonal firm has its revenues being accumulated at different times of the year. There
is no continuous productivity. The challenge facing these firms is that its expenses will be
continuous while the revenues will seasonal making it hard for them to compare the
revenues to the expenses.

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6. Rent $2,200*12= 26400
Accounting service $2,600*12=31200
Insurance $1,100*12=13200
Phone electricity $550*12=6600
Manager’s salary=$89,000
$6500
7.65% Security contribution= 13226
Total expenses=$ 186,126
7. The difference between cash flow and revenues is that while revenues are the output
resulting from sales in a business setup. The proceeds from sales. The expenses, on the
contrary, are the amounts that the business spends in the process of performing various
duties they include employee wages and production costs.
8. Recurring revenues and commission-based firms often experience losses during periods
of rapid sales since they will have to pay more commission resulting from the rapid sales
(Cao, 2019, August). He selling expenditures become more.
Group V
1. General and administrative expenses are the costs and expenses incurred by the business
that are not directly attributed to the cost of production. Profit is the amount obtained
from sales after the expenses are removed.

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2. Earnings before interest and taxes are the total firms' earnings in which the interest
expenses and tax expenses are not included. It is essential as it shows the total profit the
business will earn from its production.
3. Working capital is the amount of liquidity the firm has. It describes the ability of the firm
to handle its daily expenses.
4. The importance of a start-up company to determine the number of funds needed is to
ensure that all the business needs are included in the budget.

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References
Li, Y., Sheng, G., & Sun, M. (2017, April). The Research of CDIO-Based Innovative
Entrepreneurial Financial Talent Training Mode. In 7th International Conference on
Education, Management, Information and Mechanical Engineering (EMIM 2017).
Atlantis Press.
Cao, X. (2019, August). Research on the" 1+ 1+ 4+ 6" Training Model of Innovative and
Entrepreneurial Female Talents of Financial Management Major in Shandong
Universities. In 1st International Symposium on Innovation and Education, Law and
Social Sciences (IELSS 2019). Atlantis Press.
Weber, A. (2019). Financial Management Skills and Entrepreneurial Success: Evidence from
Transaction-level Data. Working Paper.