Practice Test Geeks(CBB) Certified Business Brokers Practice Test
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Business Valuation & Financial Analysis Flashcards

6 cards from real CBB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 6 Business Valuation & Financial Analysis flashcards as text

  1. Which method is commonly used to determine a business’s fair market value?

    Answer: Income Approach

    The income approach estimates value based on the future income a business is expected to generate.

  2. What financial metric is most important for determining cash flow available to a buyer?

    Answer: Seller’s Discretionary Earnings (SDE)

    Seller’s Discretionary Earnings (SDE) reflects true cash flow by adding back expenses not needed by a new owner.

  3. Which of the following is typically adjusted when calculating SDE?

    Answer: Owner's compensation

    Owner’s compensation is often adjusted out of the income statement to reflect transferable earnings.

  4. What does a high inventory turnover ratio generally indicate?

    Answer: Strong product sales

    High turnover means products sell quickly, which may suggest strong sales performance and inventory management.

  5. When using a market-based valuation, what is typically compared?

    Answer: Similar business sales

    This approach values a business based on sales data from similar businesses recently sold in the market.

  6. Which document is most useful when analyzing a business’s financial history?

    Answer: Tax returns

    Tax returns provide reliable, third-party verified information on a business's financial operations.

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