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REVISION EXAMINATION – 4 (B)
ENTREPRENEURSHIP (066)
1. b. Capital Market
2. a. Private placement
3. b. Right Issue
4. b. venture capitalist
5. b. Both A and R are true but R is not the correct explanation of A
6. b. small; large
7. b. 2,500 units
8. b. i,iv
9. b. By calculating Re-order point
10. a. Both A and R are true and R is the correct explanation of A
11. a. 12.90
12. a. 70,000 and 30,000 units
13. b. High initial investment
14. a. Product Extension Merger
15. b. Amalgamation
16. a. Both A and R are true and R is the correct explanation of A.
17. a. franchising
18. . b. Operations manual
Section B 2m
19. The financial market is where all trades involving financial assets happen. The capital
market is where companies and governments go to raise long-term capital. The stock
market is where people buy and sell equity in listed corporations. The bond market is
where people buy and sell bonds.
20. The source of funding used by Anjali is Angel investors.
21.
50 340 17,000
45 370 16,650
35 650 22,750
30 800 24,000
25 975 24,375
10,4775
Average Total Billed Amount = Total Billed Amount Total Number of customers
= 1,04,775 / 185
= 566.35/-
22. Working capital is called the “Changing” or “Circulating Capital”, since the money
circulates in various forms of current assets in a continued manner. For example, funds
once tide up in the form of raw material are later converted into the form of finished
goods which are ultimately sold.
23. Manufacturing franchise opportunity
24. Financial Synergy arises from the improved efficiency of financing activities and is
primarily linked to a reduction in the Cost of Capital. Operational Synergy is achieved
through the improvement of operating activities, such as reduced costs from Economies
of Scale.
Section – C 3 m
25. Drawbacks: While there are benefits to going public, it also means additional obligations
and reporting requirements such as:
Increasing accountability to public shareholders.
Need to maintain dividend and profit growth trends.
Becoming more vulnerable to an unwelcome takeover.
Need to observe and adhere strictly to the rules and regulations by governing bodies.
Increasing costs in complying with higher level of reporting requirements.
Relinquishing some control of the company following the public offering.
Suffering a loss of privacy as a result of media interest. (Any Six)
or
Venture capitalists are typically very selective in deciding what to invest in and as a rule
of thumb:
(1) They may invest in one in four hundred opportunities presented to it,
(2) Looks for the extremely rare, yet sought after qualities, such as : (a) innovative
technology, (b) potential for rapid growth, (c) a well-developed business model (d) an
impressive management team.
(3) Looks for an "exit" in the time frame of typically 3-7 years.
(4) Is inclined towards ventures with exceptionally high growth potential. The VC do not
fund for seed capital as its result and return both are not sure
26. Step 1- gross profit / margin = 12(100 pge) 14 (200 pge) 34 (300 pge)
step – 2 12x 20/100 = 2.4, 14 x 20/100 = 2.8 , 34 x 60/100 = 20.4
Step 3 – weighted average = 2.4 + 2.8 + 20.4 = 25.6
27. There are three major types of franchises - business format, product, and manufacturing -
and each operates in a different way.
28. Product Franchise Business Opportunity.
Manufacturing Franchise Opportunity. ...
Business Franchise Opportunity Ventures. ...
Business Format Franchise Opportunity.
29. Market Extension merger Strategy
Section – D 5 m
30. Early stage financing – speed capital , pre-start up and start up , second-round financing
Last stage financing/bridge/pre-public stage
31. Contract explanation , operations manual , proprietary statements , ongoing site
maintenance
32. i. “deal was its strategy of expanding into emerging and high growth markets”: Entry
into new markets: a company can enter the market avoiding too much competition. “lead
to improved profitability in the business”—Improved profitability: The acquisition will
lead to increased profits for the firm.
Ii. (a) Synergy: Synergy between the participating firms determines the increase in
value of the combined entity. (b) Acquiring new technology: By buying another company
with unique technology, the buying company can maintain or develop a competitive
edge. (c) Acquiring a competency: To acquire a competency or capability that they do not
have. (d) Access to funds: The newly acquired company can be cash rich which will help
both the firms. (e) Tax benefits: If a loss making company is being acquired, it can lead
to reduction in tax liabilities.
33. It is deemed as a yardstick for the performance of an enterprise because it measures the
overall profitability and efficiency of the enterprise in relationship to investment made by
an entrepreneur in business. Higher the ratio higher the overall profitability of the
business.
34. breakeven point = Fixed expenses / Gross margin

Gross margin = Selling price per unit – Variable cost per unit
or
I. Minimum inventory level
II. Maximum invento9ry level
III. Recording level
IV. Danger level

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REVISION EXAMINATION – 4 (B)

34. breakeven point = Fixed expenses / Gross margin

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