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ENTP Answer Key(Work Sheet 2)

The document provides an answer key for a worksheet, detailing responses to various questions related to fixed capital, resource mobilization, and venture capital. It includes calculations for gross profit and loss before tax, as well as a definition and characteristics of venture capital. The document emphasizes the role of venture capitalists in supporting high-potential entrepreneurial ventures with equity investment and their focus on achieving high returns.

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13 views1 page

ENTP Answer Key(Work Sheet 2)

The document provides an answer key for a worksheet, detailing responses to various questions related to fixed capital, resource mobilization, and venture capital. It includes calculations for gross profit and loss before tax, as well as a definition and characteristics of venture capital. The document emphasizes the role of venture capitalists in supporting high-potential entrepreneurial ventures with equity investment and their focus on achieving high returns.

Uploaded by

gaadrish
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ANSWER KEY

WORK SHEET-2

1. Option –a

2. Option-b

3. False. Fixed capital is used to buy non-current assets like land, property, plant, etc. and is permanent in nature
and thus less liquid.

4. False. Resource mobilisation advocates having the right type of resource, at the right time, at right price with
making right use of acquired resources. Correspondingly, it involves optimally using, and maximizing, existing
resources that is cost-effective and avoids wastage.

5.

(a) Variable cost 10,200

(b) Total Income [(10*2000) + (5*200) + (5*1000)] 26,000


Less: Cost of Goods sold 10,200
Gross profit 15,800

(C ) Profit before tax:-


Gross Profit 15,800
Less: Depreciation (2,000)
Wages (10,000)
Rent (5,000)
Interest (5,000)
Supplies Exp (4,000)
Loss before Tax (10,200)

6. The term venture capital is defined as equity by which an investor supports an entrepreneur with finance and
business skills to exploit market opportunities and thus obtain long-term market gains. These are investors and
investment companies whose speciality is financing new, high-potential, high-technology-oriented
entrepreneurial ventures. The mode of raising funds through venture capitalists :

(i) They are more interested in financing ventures which are in their second or third stage of development.

(ii) They often provide initial equity investment to start up a business.

(iii) Such ventures can be software, biotechnology, high-potential ventures, high-technology ventures, or
ventures having high potential prospects and returns expected.

(iv) Venture capitalists look for a high rate of return. Thus, they want equity, or some share of ownership in
return for their capital.

(v) They are willing to take the higher risk of losing their capital for a chance of profit from the business’s
success.

(vi) The venture capitalist sells his or her percentage of the business to either another investor or back to
the entrepreneur after a specific number of years of association or when he finds returns lowering
down.

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