Exam 7: Buying an Existing Business

Business valuation is partly an art and partly:

It is important to develop a list of criteria that a potential business acquisition must meet.

A disadvantage of the market approach to valuing a business is finding similar companies for comparison.

When the location of the business is critical to its success,it may be wise to purchase a business in another location.

A company's P/E ratio is:

Ralph buys a software business from Waldo in Columbus,Ohio.As part of the deal,Waldo signs a covenant not to compete by opening another software business anywhere in Ohio for the rest of his life.Such a covenant would be enforceable.

The recommended step(s)when buying a business is (are):

When seeking to evaluate the financial soundness of the company prior to purchase,the buyer needs to examine:

Review the key legal issues an entrepreneur needs to consider when evaluating an existing business.

According to the discounted future earnings technique,a dollar earned in the future is worth more than a dollar earned today.

________ clauses require the buyer to pay the full amount of the remaining loan balance or to finance the balance at prevailing interest rates.

________ is (are)creditors' claims against an existing business.

When conducting a self-evaluation,it is important to consider:

Which of the following is an exception among important factors that a potential buyer should investigate?

Goodwill is the difference between an established,successful business and one that has yet to prove itself.

One way to get a mutually satisfying deal when negotiating is to recognize and try to meet the other party's need(s).

What questions should the buyer ask in determining the value of the seller's assets?

The median selling price of a private company is:

Which method of business valuation relies on three forecasts of future earnings-optimistic,pessimistic,and most likely?

In evaluating an existing business,entrepreneurs should seek to answer several questions,including: