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Management Entrepreneurship

Business

Quiz 6 :

Taking Over An Existing Business

Quiz 6 :

Taking Over An Existing Business

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Having an established supplier relationship is an advantage of buying an existing business.
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True False
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True

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There are not as many factors that could contribute to the sale of a business as there are reasons for business liquidations.
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False

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A major advantage of purchasing an existing business is that the customers are familiar with the location.
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True

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Industry averages exist comparing expenses to sales for every size and type of business.
True False
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It is important not to let emotions cloud judgment when making business purchase decisions.
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Brokers take classes and pass examinations to become certified business intermediaries.
True False
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Word-of-mouth information through friends and family may turn up business opportunities that do not appear through formal channels.
True False
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Determining the price offered for a business should begin by adding the value of the tangible and intangible assets with the sales potential of the business.
True False
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When analyzing the financial statements of the business,it is important to rely most heavily on the most recent year of operation.
True False
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A key factor in business valuation is review of what other companies in the industry have sold for.
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Buying an existing business is becoming a more popular way to own a small business.
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Asking the owner of a business where you have been a regular customer whether the business is for sale may be one source of finding a potential new business.
True False
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Due diligence is the process of fact finding to determine the total condition of a business being considered for purchase.
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When discussing the purchase of an existing business,it is not necessary to get verbal understandings in writing from the seller.
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When the owner of a business decides to sell,the reasons the owner tells prospective buyers may be somewhat different than the actual reasons.
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Existing businesses do not have to be scrutinized carefully to determine whether they are a worthwhile investment of time and money.
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If an existing business is purchased,the buyer may be potentially liable for past business contracts.
True False
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You should never ask the owners of a business where you are a customer whether they are interested in selling their business.
True False
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Real estate brokers may be a good source of potential businesses for sale since their listings may include business real estate.
True False
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The fact that a business's image is difficult to change is a distinct advantage when taking over an existing business.
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