Business Plan Financial Projections 1

Question 1

What does a pro forma income statement show in a business plan?

Accepted Answer

Projected revenues, expenses, and net income

Answer

Historical profits only

Answer

Current cash on hand

Answer

Break-even point only

Question 2

Which financial statement tracks the flow of cash in and out of a business?

Accepted Answer

Cash flow statement

Answer

Balance sheet

Answer

Income statement

Answer

Equity statement

Question 3

What is a break-even analysis used for in a business plan?

Accepted Answer

To determine when revenue equals total costs

Answer

To show total revenue

Answer

To calculate tax liability

Answer

To project market share

Question 4

What does 'burn rate' mean in financial projections?

Accepted Answer

The rate at which a startup spends its capital

Answer

Annual revenue growth

Answer

Cost of goods sold per unit

Answer

Interest paid on loans

Question 5

Which ratio measures a company's ability to meet short-term obligations?

Accepted Answer

Current ratio

Answer

Debt-to-equity ratio

Answer

Gross margin ratio

Answer

Return on investment

Question 6

What is working capital in a business plan context?

Accepted Answer

Current assets minus current liabilities

Answer

Total long-term assets

Answer

Owner's equity

Answer

Net profit after tax