An investor is considering buying a restaurant that has been in operation for a number of years. The restaurant has a highly-reputed chef, and many long-term kitchen and wait staff who work together smoothly. It has a reputation for dishes of consistently high quality and an appealing dining atmosphere.
A) The success of this restaurant is so heavily based on human resources that the business will likely be subject to inertia in the future.
B) The investor will find that the restaurant's financial statements will undervalue the true value of its resources.
C) The investor should be aware that intangible assets are difficult to leverage into additional business.
D) The investor should search for a firm which has competitive advantages based on tangible resources.

Question

Quizplus · Accepted Answer

The restaurant's reputation, skilled staff, and appealing atmosphere are intangible assets that may not be fully reflected in financial statements, potentially undervaluing the business's true worth.

An Investor Is Considering Buying a Restaurant That Has Been