As an employee of a small business, DeMonte has observed the owner's desire to retire. Since DeMonte would like to buy the business, he needs to determine how much the business is worth. In order to determine a fair price for the business, DeMonte should add up the market value of all of the firm's physical assets such as buildings, machinery, equipment, and inventory, and willingly pay this amount for the business.

Question

Quizplus · Accepted Answer

While the market value of physical assets can be one factor in determining the value of a business, it is not the sole determinant. Other factors such as the business's revenue and profitability, customer base, brand recognition, intellectual property, and potential for growth also need to be considered. Therefore, simply adding up the market value of physical assets may not result in a fair price for the business.

As an Employee of a Small Business, DeMonte Has Observed