When evaluating the financial position of a business he or she is considering buying, an entrepreneur should examine:
A) its income statements and balance sheets from the past three to five years.
B) its income tax returns for the past three to five years.
C) the owner's compensation and that of relatives.
D) All of the above

Question

Quizplus · Accepted Answer

To evaluate the financial position of a business, an entrepreneur should consider all of the above options. Examining the income statements and balance sheets from the past three to five years can give insight into the company's revenue and profits. Reviewing income tax returns from the past few years can uncover any potential financial issues or discrepancies. Analyzing the owner's compensation and that of relatives can reveal if the company is overcompensating its management, which could impact profitability.

When Evaluating the Financial Position of a Business He or She