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Study Guide Exam 1

Study guide venture finance

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13 views

Study Guide Exam 1

Study guide venture finance

Uploaded by

parkjinyoung1308
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Exam 1 Helpful Hints and Study Guide

Helpful Hints:
 The exam questions will be based off of the end of chapter practice questions that are
listed in each week’s module (solutions have been provided in Canvas) as well as the
examples that I have provided on the audio lectures. Use this as part of your study
guide.
 There may be some short answer questions along with quantitative questions where
you will need to calculate an answer and enter it into a “fill in the blank” box. There
will be no multiple choice unlike the quiz.
 When taking the exam show as much work as possible to maximize your total points.
Even if you get the question wrong I will still give partial credit if you correctly
identified the right equation(s) in solving the problem.
 Before answering any questions read through the whole exam and then complete the
questions that you are most comfortable with first.
 As you know the exam will be proctored through the application Proctorio. Make
sure that you have completed the extra-credit practice quiz to ensure that your
computer’s web browser meets the requirement for this application as well as
review the Proctorio documents provided in this module that explains what
materials are allowed and disallowed for this exam.

Study Guide:

 Conceptually, be able to describe


1. Funding through the different stages of growth of a venture (section 1.6-
1.7)
2. Key principles of venture finance (Lecture “Venture Financing Principles”)
and section 1.4)
3. The process that investors use to screen new ventures including the use of
the Venture Opportunity Selector tool (VOS). For the VOS tool ensure you
know the metrics that investors use to evaluate a new investment
opportunity. Figure 2.9 is a good summary of these metrics. (section 2.5-
2.6).

 For the quantitative questions be able to:


4. Evaluate a start-up using the Venture Opportunity Selector (VOS) tool for
both the “Profitability” and “Financial/Harvest” dimensions. Also pay
close attention to the financial metrics that allow investors to determine if
a business is a commodity like business. (section 2.5-2.6).
 Read an income statement, balance sheet, and cash flow statement and
define the accounts that make up these statements. (Lecture: “Accounting
Principles” and section 4.1-.3)
 Forecast ending balances on the Income Statement and Balance Sheet.
(Lectures: “Forecasting Principles parts 1-4”, review “Master Forecast”
excel file, section 9.5).
 Calculate a company’s cash build and cash burn rates. (section 5.3)
 Calculate all components of the Available Funds Needed Equation. (section
9.4)
 Assess the financial position of a firm compared to select industry financial
benchmarks using financial ratio analysis. For the NOPAT financial ratio
see section 5.5-.6).
 Calculate all parts of the return on equity model (Lecture: “Return on
Equity model”)
 Calculate all parts of the return on asset model (section 5.5-.6)
 Calculate survival breakeven revenue (section 4.6)

 To be successful on the quantitative questions you will need to memorize (equations


are written out on the PowerPoint file “Equations for Exam 1”) and be proficient at
using the following equations:
1. Current ratio
2. Debt to Equity ratio
3. A/P Turn Over ratio (and how to forecast ending A/P balance)
4. Inventory Turn Over ratio (and how to forecast ending Inventory balance)
5. A/R Turn Over ratio (and how to forecast ending A/R balance)
6. Net Income margin
7. Nopat margin
8. Return on Asset model
9. Return on Equity Model
10. Available Funds Needed
11. Cash Build/Burn
12. Survival Breakeven Revenue

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