Which of the Following Statements Concerning Financing the Purchase of an Existing

question 123

Multiple Choice

Which of the following statements concerning financing the purchase of an existing business is not true?

• A) The business seller usually is a good candidate for a source of financing.
• B) The deal should allow the buyer to make the loan payment out of the company's cash flow.
• C) The buyer should wait until late in the purchase process to arrange financing to avoid processing fees in case the deal falls through.
• D) All of the above

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Definitions:

Convertible Bonds

Debt securities issued by a corporation that can be converted into a specified number of shares of the corporation's stock at the option of the bondholder, typically at certain times during the bond's life.

Equity Method

An accounting technique used to record an investor's proportional share of the investee company's income, expenses, and dividends received.

Investment Balance

The total value of all securities, such as stocks, bonds, and other investments, an individual or entity owns.

Cash Dividends

Earnings paid out to shareholders by a corporation, typically as a profit distribution.