All but Which of the Following Are Important Considerations When

question 26

Multiple Choice

All but which of the following are important considerations when determining how much should be paid for an existing business?

• A) Valuation of the firm's tangible net assets
• B) Expected future earnings
• C) Market demand for that type of business
• D) Emotional appeal of the business to the prospective buyer

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Definitions:

Inventory

The inventory of products and materials maintained by a business for selling or manufacturing purposes.

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods or services bought on credit.

CCA Class

A categorization in the Canadian tax system that groups assets with similar properties for depreciation purposes.

Operating Income

This is the profit realized from a business's core operations, indicating the financial health of the business by excluding the effects of financing and investments.