To Effectively Use Operating Ratios, a Prospective Buyer Should ______

question 10

Multiple Choice

To effectively use operating ratios, a prospective buyer should ______.

• A) compare them to industry standards
• B) use them to identify problems that exist and make changes
• C) use them as a basis for valuing the business
• D) compare them to the closest competitor

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Definitions:

Factory Overhead Cost

All indirect costs associated with manufacturing, such as utilities, rent, and maintenance not directly tied to production.

Construction Contractor

A business or individual that contracts to perform construction services, often involving both labor and materials for building projects.

Carpenters

Skilled tradespeople who work with wood to construct, install, and maintain buildings, furniture, and other objects.

Factory Overhead Cost

Indirect costs incurred during the manufacturing process, not directly associated with the production of goods, like utilities and rent for the manufacturing space.