An Agreement in Connection with the Sale of a Business

question 19

True/False

An agreement in connection with the sale of a business that prohibits the seller from engaging in the same or a similar business for a period of twenty-five years would be unreasonable.

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Definitions:

Inventory Turnover

A measure of how quickly a company sells its stock of goods in a period, calculated by dividing the cost of goods sold by the average inventory level.

Equity Multiplier

A financial leverage ratio that measures the portion of a company's assets that are financed by shareholders' equity.

Debt-to-equity Ratio

The ratio that demonstrates the comparative financing from shareholders' equity and debt for a company's assets.

Times Interest Earned Ratio

The Times Interest Earned Ratio measures a company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.