Bob Boyd Is Developing an Exit Strategy for His Sporting

question 74

Multiple Choice

Bob Boyd is developing an exit strategy for his sporting goods business,since he plans to retire within the next three years.Bob knows that one of the company's greatest strengths is that there is a core group of motivated employees who have been with the company for years.Based on this information,which exit strategy would be the best option for Bob?

• A) Sell to a strategic buyer
• B) Sell to a key employee or group of employees
• C) Take the company public
• D) Undertake a planned liquidation

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Definitions:

Current Ratio

A financial metric indicating how well a company can settle debts due within one year, determined by dividing current assets by current liabilities.

Equity Multiplier

A measure of a company's financial leverage, calculated as total assets divided by total equity, indicating how much of assets are financed by equity.

Du Pont Identity

A framework for analyzing a company's return on equity (ROE) by breaking it down into three components: operating efficiency, asset use efficiency, and financial leverage.

Total Asset Turnover

A financial ratio that measures a company's efficiency in using its assets to generate sales revenue.