People Like Sibusiso Who 'Bootstrap' Company Financing Are

question 63

Multiple Choice

People like Sibusiso who 'bootstrap' company financing are:

• A)enhancing the "corporate image" of the enterprise by the way they raise capital.
• B)depending on their own initiative to obtain the capital necessary to start up and grow.
• C)subordinating future capital formation to short-term financial performance.
• D)waiting to establish a reputation in the marketplace before raising the bulk of the needed capital.

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Definitions:

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, a measure of how revenue growth translates into growth in operating income.

Variable Costing

A managerial accounting method that includes only variable production costs (materials, labor, and overhead) in product costs, treating fixed manufacturing overhead as an expense of the period.

Absorption Costing

An accounting method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed manufacturing overhead - in the cost of a product.

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues.