SBA Business Operations & Management Flashcards

What is the significance of the 'current ratio' in evaluating a small business's financial health?

Answer: It shows the ability to pay short-term obligations with short-term assets

The current ratio (current assets divided by current liabilities) measures a company's ability to pay its short-term debts with its short-term assets.

What type of insurance protects a small business against lawsuits from customers injured on the business premises?

Answer: General liability insurance

General liability insurance protects businesses against claims of bodily injury, property damage, and related legal costs from third parties such as customers.

What does 'SWOT analysis' stand for in business planning and operations?

Answer: Strengths, Weaknesses, Opportunities, Threats

SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats — a strategic planning tool for evaluating a business's internal and external factors.

What is the purpose of a non-disclosure agreement (NDA) in small business operations?

Answer: Legally protect confidential information shared with employees or partners

An NDA (Non-Disclosure Agreement) is a legal contract that prevents parties from sharing confidential business information with unauthorized third parties.

Which form of business ownership allows two or more people to share management and profits without forming a corporation?

Answer: General partnership

A general partnership allows two or more individuals to co-own and manage a business, sharing profits, losses, and personal liability.

What does the term 'scalability' refer to in the context of small business growth?

Answer: The capacity to increase revenue without a proportional increase in costs

Scalability refers to a business's ability to grow revenues significantly while keeping cost increases proportionally smaller, improving profitability as volume grows.