In a Business Sale, a Letter of Intent

question 116

Multiple Choice

In a business sale, a letter of intent:

• A) states that the buyer and the seller have reached a sufficient meeting of the minds to justify the time and expense of negotiating a final agreement.
• B) should contain a clause calling for "good faith negotiations" between the parties.
• C) addresses such issues as price, payment terms, a deadline for closing the deal, and others.
• D) All of the above

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Definitions:

Firm's Equity

The value of a company's assets minus its liabilities and debt; essentially, it represents the ownership value held by shareholders in the company.

Dividend Payout

The percentage of earnings distributed to shareholders in the form of dividends.

Additional Debt Financing

Raising more funds for a company through borrowing, which may increase the company's debt-to-equity ratio.

Return on Sales

A financial metric that measures the efficiency of a company in generating profits from its revenue, calculated as net income divided by total sales.