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The questions which follow provide a basic knowledge test of selected concepts covered in this learning pathway: Valuing a new start-up.

The questions published at the end of each learning pathway are re-used for the knowledge test for learners interested in earning a digital badge or certificate of participation for the Financing a business start-up (IENT103) micro-course. Please consult the Certify participation page for more information.

assessment

True - false questions

Indicate whether the following statements are true or false:

  • The EBITDA measure is a measure of a business’s operating performance.
    • True
      • Correct. This is true.
    • False
      • Incorrect. This is a standard measure of operating performance.
  • The terms of financing options are based on the risk/reward principle
    • True
      • Correct, this is true.
    • False
      • Incorrect, the risk/reward principle is the basis for assessing financing options.
  • Valuing a new start-up business utilises standard methods for evaluating businesses.
    • True
      • Incorrect. Valuing a new business can be difficult because there are no historical performance records to look at, so methods must be adapted for start-up businesses.
    • False
      • Correct.
  • Low barriers to market entry represent a low risk for investors.
    • True
      • Incorrect. Low barriers to entry mean that new companies can enter the market easily. This represents a higher risk for investors.
    • False
      • Correct.

assessment

Multiple choice questions

  • What is EBITDA short for?
    • Earnings Before Interest, Tax, Debt and Assets
      • Try again.
    • Earnings Before Investment, Trading, Deposits and Assets
      • Try again.
    • Earnings Before Investment, Tax, Depreciation and Amortization
      • Not quite. Have another go!
    • Earnings Before Interest, Tax, Depreciation and Amortization
      • Yes, that’s right!
  • According to the IENT103 course, how many start-up businesses are likely to fail?
    • 2 out of every 5
      • Try again.
    • 4 out of every 5
      • That’s right! This might be discouraging, but remember that there are things you can do to prepare and minimise the risks.
    • 1 out of every 5
      • Unfortunately, this is too low. Try again.
  • Which one of the following statements is the best definition of ‘break-even point’?
    • The break-even point is the point at which all bank loans have been repaid
      • Try again.
    • The break-even point is the point at which a start-up business enters a new market
      • Try again.
    • The break-even point is the point at which total revenue is equal to total expenses
      • You’re right! When a company does not make a profit or a loss, it breaks even.
    • The break-even point is the point at which fixed costs are equal to variable costs
      • Try again.
  • Which one of the following statements about pre-money valuation is FALSE?
    • Pre-money valuation is the value you quote to a potential venture capitalist or other funding source to get funding for your business
      • This is true. It is essentially how you value your business.
    • Pre-money valuation can be based on marketing campaigns
      • This is false. Marketing campaigns may bring in more paying customers, which would impact the pre-money valuation, but marketing campaigns in themselves do not determine valuation.
    • Pre-money valuation can be based on the traction of the start-up business
      • This is true. Traction is about how long the start-up has been in business, and how fast it is growing (when compared with the competition).
    • Pre-money valuation can be based on brand value
      • This is true. Brand value is basically the same as brand awareness and brand recall; how aware consumers are of your start-up, your products, and/or your services.