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1 | |
The percentage of businesses that are owned by a single family is: |
| | A) | 97% |
| | B) | About 50% |
| | C) | About 1/3 |
| | D) | None of the above |
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2 | |
The following are not problems that tend to be unique to a family business. |
| | A) | The blurring of roles in the business with roles in the family |
| | B) | The family successor always being incompetent to manage the business |
| | C) | Differing objectives of the various family member owners about the direction of the business and the distribution of income |
| | D) | None of the above |
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3 | |
The following are important principles for the success of a family business. |
| | A) | The owner creates clear role structures and descriptions for family members |
| | B) | The owner ensures that there are effective incentives for non-family employees |
| | C) | The owner provides the opportunity for potential family owners to obtain skill/training outside the business |
| | D) | All of the above |
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4 | |
When transferring the business through a will, the owner/manager: |
| | A) | Maintains control over the business |
| | B) | Impedes serious tax consequences from arising |
| | C) | A and B |
| | D) | None of the above |
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5 | |
Gifting program refers to: |
| | A) | A method of buying assets that are tax deductible |
| | B) | A method of transferring the business to family members |
| | C) | A method that grants business ownership to outsiders |
| | D) | A method that relies on the gradual dissolution of a business |
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6 | |
Brandy Hamm is considering an IPO on her growing computer business. Before doing so, she should consider: |
| | A) | Reviewing the strength of her management team |
| | B) | Assess the company's overall capital structure |
| | C) | Re-evaluate her company's financial performance |
| | D) | All of the above |
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7 | |
Which of the following indicate that a business is ready to go public? |
| | A) | The company can generate a return on equity of 5 to 10% |
| | B) | The company has avoided popular specialized markets |
| | C) | The company has $30 million in annual revenues |
| | D) | All of the above |
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8 | |
Which of the following characteristics are indicative of a private placement? |
| | A) | Short-term stock performance is important |
| | B) | Few investors are involved |
| | C) | High earnings are important |
| | D) | All of the above |
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9 | |
One should considering going public if the business needs a substantial amount of capital for growth. |
| | A) | True |
| | B) | False |
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10 | |
The majority of business bankruptcies are large businesses. |
| | A) | True |
| | B) | False |
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11 | |
If a business declares bankruptcy and the assets are converted to cash what is the correct order in which creditors will receive proceeds:I. unsecured creditors
II. secured creditors
III. preferred creditors |
| | A) | I, II, III |
| | B) | II, III, I |
| | C) | II, I, III |
| | D) | III, II, I |
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12 | |
What does it mean when a company is in receivership? |
| | A) | An outside agency attempts to manage the company out of difficulty |
| | B) | The business has declared bankruptcy and has liquidated all assets |
| | C) | The business is on the brink of selling to outside investors |
| | D) | None of the above |
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13 | |
Almost all family businesses survive into the second and third generations. |
| | A) | True |
| | B) | False |
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14 | |
In order to enhance the likelihood that a child will want to take over the family business, one should provide: |
| | A) | Proper training |
| | B) | Adequate motivation |
| | C) | A supportive atmosphere |
| | D) | All of the above |
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15 | |
What problem did Charles Northstrup experience during the transfer of his family business? |
| | A) | His son was not willing to run the business |
| | B) | Charles was not willing to give up control of the business |
| | C) | His son was incompetent at running the business |
| | D) | Charles did not adequately train his son to takeover the business |
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2003 McGraw-Hill Higher Education