Business Plan Financial Projections 3

Question 1

What is the purpose of an accounts receivable projection in a business plan?

Accepted Answer

To estimate cash expected from credit sales

Answer

To list all company debts

Answer

To calculate employee salaries

Answer

To project inventory purchases

Question 2

What does a debt-to-equity ratio indicate?

Accepted Answer

The proportion of financing from creditors versus owners

Answer

How profitable the business is

Answer

How quickly inventory turns over

Answer

The company's market share

Question 3

What is the purpose of a funding request section in a business plan?

Accepted Answer

To specify the amount of funding needed and its intended use

Answer

To summarize past sales

Answer

To list all competitors

Answer

To outline employee benefits

Question 4

What is the difference between fixed and variable costs?

Accepted Answer

Fixed costs remain constant; variable costs change with production volume

Answer

Fixed costs change with output; variable costs do not

Answer

Both change with production

Answer

Neither changes with output

Question 5

What does 'runway' mean for a startup in financial terms?

Accepted Answer

How long the company can operate before running out of cash

Answer

Revenue growth trajectory

Answer

Total capital raised

Answer

Monthly recurring revenue

Question 6

What is the role of assumptions in financial projections?

Accepted Answer

They provide the basis and rationale behind projected numbers

Answer

They replace actual data

Answer

They guarantee accuracy

Answer

They eliminate risk