Exam 6: The Business Plans: How Are They Important

It is relatively easy to change an existing negative image of a firm.

The single biggest danger for the naive business buyer is:

"Taking over" a company means buying more than 50% ownership.

Real estate agents often act as intermediaries for the sale of a business.

Identify three negotiating tips that could be used when buying a business. Explain the importance of each.

The right of a creditor to take over a particular asset is called a .

The alternative to buying shares of a business is to just buy the .

The ratio that indicates the "liquidity" of a company is:

Present value calculations are based on the idea that money is more valuable if received now than if received in the future.

Buying an independent business is on average lower risk than buying a franchise.

You must know your desired "rate of return" to use the Capitalization of Earnings method.

Cash skimming is a legal but misleading practice.

A clause that requires a business seller to tell the buyer about anything that might discourage the sale is called a clause.

Unnecessary items that a company owns are know as assets.

A negotiating plan for purchasing a business will include values for:

A firm's ability to pay all of its financial obligations is called .

A company's financial statements are interpreted by using:

Explain the concept of ratio analysis. Identify several key ratios and explain what they might indicate about the health of a company. .

Typically, the business valuation method showing the lowest value is:

The critical question to ask a business seller is "what is the price?"