Income Statement: The income statement of a firm is also referred to as the profit and loss statement. It is one of the financial statements of a company. The income statement shows the financial performance of a company for a particular period of time. It lists down all the revenues and expenses of a firm for a particular time period. Basically it calculates the net profit or net loss of the company which is carried forward to the balance sheet. Net Income or Earning The net income, also called as the earnings of the firm is calculated in the income statement where all the expenses and losses of the firm for a particular time period are listed. It is the measure of profitability of the firm. To Identify: The reason why the firm’s net income does not correspond to the cash earned.

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Chapter 2, Problem 7CC

Summary Introduction

Income Statement:

The income statement of a firm is also referred to as the profit and loss statement. It is one of the financial statements of a company. The income statement shows the financial performance of a company for a particular period of time. It lists down all the revenues and expenses of a firm for a particular time period. Basically it calculates the net profit or net loss of the company which is carried forward to the balance sheet.

Net Income or Earning

The net income, also called as the earnings of the firm is calculated in the income statement where all the expenses and losses of the firm for a particular time period are listed. It is the measure of profitability of the firm.

To Identify:

The reason why the firm’s net income does not correspond to the cash earned.

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QUESTION 1 Examine the information provided below and answer the following question. (10 MARKS) The hockey stick model of start-up financing, illustrated by the diagram below, has received a lot of attention in the entrepreneurial finance literature (Cumming & Johan, 2013; Kaplan & Strömberg, 2014; Gompers & Lerner, 2020). The model is often used to describe the typical funding and growth trajectory of many startups. The model emphasizes three main stages, each of which reflects a different phase of growth, risk, and funding expectations. Entrepreneur, 3 F's Debt(banks & microfinance) Research Business angels/Angel Venture funds/Venture capitalists Merger, Acquisition Grants investors PO Public market Growth (revenue) Break even point Pide 1st round Expansion 2nd round 3rd round Research commercial idea Pre-seed Initial concept Seed Early Expansion Financial stage Late IPO Inception and prototype Figure 1. The hockey stick model of start-up financing (Lasrado & Lugmayr, 2013) REQUIRED:…

critically discuss the hockey stick model of a start-up financing. In your response, explain the model and discibe its three main stages, highlighting the key characteristics of each stage in terms of growth, risk, and funding expectations.

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