In Buying an Existing Business, the Prospective Buyer Should Ask

question 115

Multiple Choice

In buying an existing business, the prospective buyer should ask questions about the operation of the business. Which of the following would be the most appropriate question to ask?

• A) How are you going to use the money you receive for the business?
• B) Are any of the employees creating problems?
• C) Who loaned you the initial investment?
• D) Are there any problems with the business?

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Definitions:

Cash Flow

The overall volume of financial resources circulated within and out of an enterprise, affecting its solvency.

Project

A planned set of interrelated tasks to be executed over a fixed period and within certain cost and other limitations.

Payback

A capital budgeting method that calculates the period of time required for the return on an investment to repay the original investment cost.

Cash Flow

Cash Flow is the total amount of money being transferred into and out of a business, especially as affecting liquidity. It is often considered in terms of net cash flow, which is income minus expenses.