A method of determining the value of a business based on its profit potential is known as a(n) ______.
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Correct Answer:
Income statement method of valuation
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When the buyer and the seller have agreed on the terms of the sale, the closing can be handled by ______.
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Correct Answer:
Escrow settlement
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Within his profession, Alex Wilson serves as an intermediary that brings sellers of businesses together with potential buyers. Alex can best be described as a/an
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Correct Answer:
Business broker
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Inventory, equipment, and building are examples of what kinds of assets?
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Correct Answer:
Only current assets
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Family, friends, the newspaper, the Small Business Administration (SBA), a local banker, and real estate brokers may all have information on ______.
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Correct Answer:
Possible businesses for sale
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Goodwill can be seen as compensation to the seller for which of the following?
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Correct Answer:
Beginner’s mistakes that the new owner will not have to make
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The financial statements can provide access to ______, a very important piece of information for a prospective buyer to use in determining net profit.
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Correct Answer:
Sales volume
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What of these is used to indicate whether sales volume is increasing or decreasing?
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Correct Answer:
Financial records
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The most practical method of paying for a business is ______.
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Correct Answer:
Paying in installments
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Few businesses that are for sale have a high amount of ______ value.
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Correct Answer:
Goodwill
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An advantage in purchasing an existing business is which of the following?
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Correct Answer:
There is an established customer base at the present location.
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Which of the following types of business are characterized by two or more members of the same family who control or are directly involved in and own a majority of the business?
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Correct Answer:
Family-owned businesses
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A settlement attorney during a closing represents ______.
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Correct Answer:
The buyer and the seller
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Which of the following is a guideline that should be followed in a family business?
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Correct Answer:
Family members must meet the same standards as nonfamily members in performance reviews.
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The prospective buyer should determine a price for the business by adding the value of tangible and intangible assets with the ______ potential.
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Correct Answer:
Profit
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Tangible assets are the assets owned by a business that can?
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Correct Answer:
Both a and b
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Price Multiples Business Valuation is a method of determining the value of a business based on applying specific appropriate:
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Correct Answer:
Both a and b
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Non compete clause is a provision often included in a contract to purchase a business that:
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Correct Answer:
All of them
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Multiple method business valuation is a formula that applies a weighting factor based on the benefit the selling business _____ has generated.
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Correct Answer:
Owner
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Intangible assets are assets that have value to a business and
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Correct Answer:
Not visible
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Goodwill is the intangible asset that allows businesses to earn a higher return than a comparable business with the different tangible assets might generate.
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Correct Answer:
False
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Valuation method based on future cash flows the business is projected to make is called?
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Correct Answer:
Discounted cash flow
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Comparables approach is a valuation technique to look at the value of comparable companies that have recently sold.
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Correct Answer:
True
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Business broker is a business intermediary that brings sellers of their businesses together with potential buyers.
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Correct Answer:
True
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Asset-based Business Valuation is a method of determining the _____ of a business based on the worth of its assets.
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Correct Answer:
All of them
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