Perhaps the Ideal Source of Financing the Purchase of an Existing

question 91

Multiple Choice

Perhaps the ideal source of financing the purchase of an existing business is ________.

• A) a venture capitalist
• B) the Small Business Administration
• C) the seller of the business
• D) an insurance company

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Definitions:

Operating Leverage

Operating leverage is a measure of how revenue growth translates into growth in operating income, highlighting the scalability of a company’s business model.

Variable Costs

Expenses that vary in relation to the amount of output or business operations.

Fixed Costs

Business expenses that remain constant, regardless of the level of production or sales activity.

Break-even Sales

The amount of revenue from sales that equals the total of variable and fixed costs, with no profit or loss.