Question

1. A large amount of ________ expenses will lead to a high amount of risk since they will ________ with revenues

a) Variable; change

b) Variable; not change

c) Fixed; change

d) Fixed; not change

2. The gap between cash inflows and cash outflows will likely be most harmful to a firm that

a) Has a large amount of fixed costs

b) Has a large amount of variable costs

c) Has materials as its largest expense

d) Has labor as its largest expensive

3. is NOT one of the 6 activities essential to entrepreneurial financial management.

a) Financial forecasting

b) Setting financial goals

c) Hiring employees

d) All of the following are activities essential to entrepreneurial financial management

Answer 1

1. Your required answer is option D i.e. A large amount of Fixed expenses will lead to a high amount of risk since they will Not Change with revenues.

Here is risk with fixed assets that if any point of time if revenue is very low in any year even than the fixed amount will be same i.e. unchanged

2. Your required answer is option A i.e. The gap between cash inflows and cash outflows will likely be most harmful to a firm that Has a large amount of fixed costs.

Because the cost of fixed assets is very high and cash outlow will be also high and therefore the gap between cash inflow and outflow will not represent a true and fair image.

3. Your required answer is option D i.e. All of the following are activities essential to entrepreneurial financial management

An enterpreneur should have skill of Financial forcasting, setting financial goal,hiring employees and many more.

I hope this clear your doubt.

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