Chapter 1
1. U.S. Small Business Administration (SBA) website (2013).
2. Welsh and White (1981).
3. U.S. Bureau of the Census (2013).
4. Gaskill, Van Auken, and Manning (1993); Hisrich and Brush (1986); Hisrich and Brush (1984); Roberson-Saunders (1991).
5. Kuratko and Hodgetts (2004), pp. 523–524.
6. Kuratko and Hodgetts (2004), pp. 524–526; Table 15.2.
7. Levitt (1960).
8. Elston and Audretsch (2011).
9. Baker and Sinkula (2008).
10. Web.com and National Association of Women Business Owners (2013).
11. Web.com and National Association of Women Business Owners (2013).
12. Coyne, Singh, and Smith (2008).
13. Ebben and Johnson (2011).
14. Boudreaux, Rao, Underwood, and Rumore (2011).
15. Warshawsky and Cahill (1996).
16. Timmons (1998).
Chapter 2
1. Kreitner (2007), p. 159.
2. Dessler and Phillips (2008), pp. 189–191.
3. Bateman and Snell (2009), pp. 75–77.
4. Kiechel (2010).
5. Schermerhorn (2011), pp. 208–209.
6. Thankur and Calingo (1992).
7. Thankur and Calingo (1992).
8. Dessler and Phillips (2008).
9. Lewis, Goodman, and Fandt (1995), p. 124.
10. Hambrick and Fredrickson (2005).
11. Zimmerer and Scarborough (2005), pp. 72–73.
12. Stoner, Freeman, and Gilbert (1998), pp. 261–306.
13. American Society for Training and Development—ASTD (1997).
14. Hamel (2000), pp. 72–73.
15. Pearce (1992).
16. Patagonia mission found in Schermerhorn (2011), p. 212.
17. Certo (1994).
18. Ireland and Hitt (1992).
19. Hellriegel and Slocum (1996), p. 142.
20. Quigley (1994).
21. Kreitner (2007), p. 159.
22. Zimmerer and Scarborough (2005), p. 74.
23. Under Armour website (2013).
24. ASTD (1997).
25. Robbins (1991), p. 221.
26. Griffin (2006), p. 38.
27. Williams (2007), p. 85.
28. Schermerhorn (2011), pp. 80–98.
29. Robbins (1991), pp. 215–243.
30. Daft (2012).
31. Hellriegel and Slocum (1996), p. 79.
32. Katz (1985).
33. Pew Research Center (2009).
34. Enez and Early (1993).
35. Twenge, Campbell, Hoffman, and Lance (2010).
36. Toossi (2006).
37. Mitchell (2010).
38. Bies and Tyler (1993).
39. Griffin (2006), p. 39.
40. Forelle (2008), p. B2.
41. Lewis et al. (1995), pp. 152–153.
42. McGregor (2010).
43. Giles (2010).
44. White (2008, March), pp. B1–B3.
45. Giles (2010).
46. Bateman and Snell (2009), pp. 28–29.
47. Green and Capell (2008).
48. Lessons (2010), pp. 49–53.
49. Marcus and Fremeth (2009).
50. Hellreigel and Slocum (1996), pp.80–81.
51. Pereira (2004), p. R4.
52. Smart and Martin (1992), p. 104.
53. Zahra and Chaples (1993).
54. Johnston and Mehra (2002).
55. Parker and Axtell (2001).
56. Dudley (2002).
57. Robbins (1991), pp. 82–83.
58. Donaldson and Preston (1995).
59. Donaldson and Preston (1995).
60. Jones and George (2009), p. 273.
61. Williams (2007), p. 173.
62. Prahalad and Hamel (1990).
63. Stalk, Evans, and Shulman (1992).
64. Mahoney and Pandian (1992).
65. Hamel (2000), pp. 72–73.
66. Griffin (2006), p. 81.
67. Porter (1996).
68. Collis and Rukstad (2008).
69. Mintzberg (1990).
70. Hamel and Prahalad (1989).
71. Mankins (2004).
72. Schermerhorn (2011), p. 210.
73. Schermerhorn (2011), p. 210.
74. Hellriegel and Slocum (1996), p. 151.
75. Beer and Eisenstat (2004).
76. Lewis et al. (1995), p. 58.
77. Williams (2007), p. 184.
78. Kinicki and Williams (2011), pp. 182–183.
79. Pearce (1994).
80. McKinley, Sanchez, and Schick (1995).
81. Porter (1985).
82. Dessler and Phillips (2008), p. 193.
83. Jones and George (2009), pp. 277–278.
84. Kinicki and Williams (2011), p. 181.
85. Hellriegel and Slocum (1996), p. 163.
86. Beer and Eisentat (2000).
87. Bossidy and Charan (2002).
88. Eisentat (1993).
89. Bateman and Snell (2009), p. 168.
90. Lewis et al. (1995), p. 168.
91. Gupta, Boyd, and Sussman (2004).
Chapter 3
1. A good website to view is sba.gov. This site provides a tremendous amount of information on financing your firm and would be the best place to begin.
2. Recourse regarding mortgages means that if you sell the loan at a loss the lender has a right to collect the difference from you. For example, if your current mortgage balance on the home was $500,000, and you were forced to sell the home for $400,000 and paid that amount to the lender, the lender would still maintain the right to collect the remaining $100,000 from you. All home equity loans are recourse loans. Whether or not your first mortgage is a recourse loan depends upon the law in your state.
3. Floating interest rates have two components: a reference rate (such as LIBOR or a prime rate), which “floats” or changes, and a fixed premium (that does not automatically change), which is added to the reference rate. LIBOR refers to the London Interbank Offer Rate (the interest rate at which banks in London borrow from each other), and Prime generally refers to the U.S. prime rate (the rate that commercial banks reserve for their best customers). In the United States, the most popular prime rate is the Wall Street Journal (WSJ) prime or rate, which is the rate charged by 75% of the 30 largest commercial banks. Again, each of these rates (LIBOR and WSJ) is referred to as a reference rate. Thus, one of these reference rates will be attached to a floating interest rate, which will also have a second interest component that is fixed interest and is typically referred to as a spread or premium.
4. See note 3.
5. See note 3.
6. A Duns PAYDEX number is a Dun and Bradstreet (D&B) measure of payment performance that ranges from 100 to 1, with 100 indicating the highest performance. Generally a PAYDEX score of 80–100 implies that your company has low risk of not paying; 50–79 implies medium risk; and, 0–49 implies high risk. These numbers are viewed by suppliers. The Duns code represents the classification used by D&B for your specific business. D&B reports may be accessed by any of your creditors, suppliers, or potential lenders, creditors or suppliers. The D&B report provides a complete, detailed history of your credit, including your payment practices, on time payments, late payments, defaults, etc. The D&B report (particularly the PAYDEX) provides a rating of your firm’s credit quality.
7. RMA refers to Robert Morris Associates ratios. The data RMA uses to calculate these ratios are obtained by member commercial banks and come from specific firm financial reports that are submitted by businesses that apply for commercial bank loans. The businesses are classified by industry using the NAICS code number. The ratios are categorized by both the sales level of the businesses as well as the asset size of the businesses. In deciding whether or not to lend to your business, commercial lenders use the ratios in the RMA reports and compare these to your business’s ratios.
8. Portfeld (2011, December), contributor.
9. Qualified or accredited investors are defined by the SEC as individuals who have a net worth of at least $1,000,000 or have earned an average income of $200,000 or more in the last two years.
10. See note 9.
Chapter 4
1. American Marketing Association (2011).
2. Boone and Kurtz (2004), p. 11.
3. The Washington Post (2013a), p. A16.
4. The Washington Post (2013b), p. A17.
5. Hausman (2013), p. 3.
6. Redsicker (2013).
7. Mickens (2012).
8. SBA Program Office (2010), p. 1.
9. Small Business Act, Section 8(d) and Small Business Act–15 (g)1.
10. Small Business Administration website (2013).
11. DOD Office of Small Business Programs (2012), p. 1.
12. DOD Office of Small Business Programs website (n.d.).
Chapter 5
1. In using the direct method in calculating cash flows from operating activities, the following is a helpful guide:
Cash from sales = Sales – increase in accounts receivable or + decrease in accounts payable – bad debt expense.
Cash paid to suppliers for inventory = Cost of goods sold + increase in inventory or – decrease in inventory + decrease in accounts payable or –increase in accounts payable.
Cash paid for operating expenses = Total operating expense – bad debt expense – depreciation – amortization + decrease in accrued liabilities or increase in accrued liabilities.
Cash paid for interest expense = interest expense + decrease in interest payable or – increase in interest payable.
Cash paid for dividends = dividends + decrease in dividends payable or –increase in dividends payable.
Cash paid for taxes = tax expense + decrease in taxes payable or – increase in taxes payable.
2. In using the indirect method in adjusting net income for cash flows from operating activities, the following is also a helpful guide (Note: a + or – sign within the parentheses indicates the direction in which net income will move with the change in the account):
(+) Decrease in Accounts Receivable (add to net income)
(−) Increase in accounts receivable – subtract from net income
(+) Decrease in inventory
(−) Increase in inventory
(−) Decrease in accounts payable
(+) Increase in accounts payable
(−) Decrease in accrued expenses
(+) Increase in accrued expenses
(+) Decrease in prepaid expenses
(−) Increase in prepaid expenses
(−) Decrease in taxes payable
(+) Increase in taxes payable
(+) Depreciation
(−) Amortization of bond premium
(+) Amortization of bond discount
(−) Gain on sale of equipment
(+) Loss on sale of equipment
Suggestions for Further Reading
Easton, P., Halsey, R., McAnallky, M., Hartgraves, A., & Morse, W. (2012). Financial & managerial accounting for MBAs (3rd ed.). New York, NY: Cambridge Publishing.
Larson, K., Spoede, C., & Miller, P. (1994). Fundamentals of financial & managerial accounting. New York, NY: Richard D. Irwin.
Reider, R., & Heyler, P. (2002). Managing cash flow. New York, NY: John Wiley & Sons.
Weaver, S., & Weston, J. (2001). Finance & accounting for nonfinancial managers. New York, NY: McGraw-Hill.
Wild, J., Shaw, K., & Chiappeta, B. (2012). Financial and managerial accounting (5th ed.). New York, NY: McGraw-Hill
Chapter 6
1. In reviewing Figure 6.1, you can see in the operating activities area that $167,500 was spent for merchandise and wages and other operating expenses in a company with $285,000 in revenues from sales. You would need to spend some time determining whether any reductions could be made in either area. In the investing area, you would, of course, examine the $5,000 spent for equipment to determine whether it was necessary, as well as whether it would have been more prudent to lease equipment, for example. Finally, you would review your financing activities, particularly the $5,000 paid out to retire notes. You should also determine whether payment of $7,000 in dividends was appropriately timed.
2. While you can certainly pick out the largest expense items in Figure 6.2, you also need to examine it from the standpoint of how your company compares with those of your counterparts. For example, calculate the profit margin (net income divided by sales) and then compare it with that of similarly sized companies in your industry. Whether your expense level is allowing you to achieve an appropriate profit margin (given your level of sales) is something that should be weighed against industry median ratios (see Chapter 3 for a discussion of financial ratios). For information on financial ratios for your industry, you should consult Robert Morris Associates (RMA), which provides median financial ratios for various industries and sizes of firms within those industries (see Chapter 3 – note 5 for more information about RMA).
3. In addition to the cost information provided in Figure 6.3, a number of financial ratios can be calculated from the balance sheet (e.g., liquidity ratios, debt ratios, etc.), or the balance sheet in conjunction with the income statement (e.g., profitability ratios). See RMA for appropriate industry comparisons.
Suggestions for Further Reading
Brimson, J., & Antos, J. (1994). Activity based management. New York, NY: John Wiley & Sons.
Easton, P., Halsey, R., McAnallky, M., Hartgraves, A., & Morse, W. (2012). Financial & managerial accounting for MBAs (3rd ed.). New York, NY: Cambridge Publishing.
Epstein, L. (2008). Small business accounting (9th ed.). Hoboken, NJ: John Wiley & Sons.
Olson, J. (1997). The agile manager’s guide to cutting costs. Bristol, VT: Velocity Business Publishing.
Pinson, L. (2007). Keeping the books (7th ed.). New York, NY: Kaplan Publishing.
Rogers, S. (2003). The entrepreneur’s guide to finance and business. New York, NY: McGraw-Hill.
Sitarz, D. (2010). Small business accounting simplified (5th ed.). New York, NY: Nova Publishing.
Wild, J., Shaw, K., & Chiappeta, B. (2012). Financial and managerial accounting (5th ed.). New York, NY: McGraw-Hill.
Appendix B
1. SBA website (2013).
2. Uniform Partnership Act—UPA (1997). Section 306. Partner’s Rights—Subsection (a), p. 49. For the classic partnership (i.e., excluding the limited liability partnership), only agreement of the claimant or provisions of law will relieve a partner from sharing responsibility for payment of partnership debts or obligations. However, a new partner is not liable for debts or obligations incurred before that person became a partner.
3. UPA (1997). Section 306. Partner’s Rights. Subsection (c), p. 49. The limited liability partnership relieves the partners of personal liability for the debts and obligations of the partnership.
4. Uniform Partnership Act State Locator (2013).
5. Godfrey (2007). This article describes a modification approved by Congress in 2004 that increased the S corporation maximum shareholder limit to 100. The modification also allows for family members (including former spouse and other family members up to the sixth generation of common ancestry) to be treated as a single shareholder.
6. Uniform Limited Liability Company State Locator (2013).
7. SBA website (2013).
Appendix C
1. Kuratko and Hodgetts (2001).
2. U.S. Copyright Office (2012). This site will answer a number of your questions about the copyright process and also includes the address of the U.S. Copyright Office.
3. U.S. Copyright Office (2013). Fees for the various types of materials that may be copyrighted are covered here. Fees for special services provided by the U.S. Copyright Office are also shown.
4. Kuratko and Hodgetts (2001), p. 134.
5. The Gentle Art (n.d.).
6. U.S. Patent and Trademark Office (USPTO) (October 2013); USPTO (March 2008a).
7. U.S. Patent and Trademark Office (USPTO) (2013). Statements regarding patent duration for all forms of patent were taken from this source.
8. J&J Distributing (2013).
9. Love and Coggins (2011).
10. U .S. Patent and Trademark Office (USPTO) (July 2012).
11. U.S. Patent and Trademark Office (USPTO) (March 2008b).
12. International Trademark Association (n.d.).
13. International Trademark Association (n.d.).
14. U.S. Patent and Trademark Office (USPTO) (August 2012).
15. U.S. Patent and Trademark Office (USPTO) (September 2013).
16. Shane (2008).