CBB Business Valuation & Financial Analysis

Question 1

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

Accepted Answer

Income Approach

Answer

Rule of Thumb Method

Answer

Asset Accumulation Approach

Answer

Cost Segregation Analysis

Question 2

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

Accepted Answer

Seller’s Discretionary Earnings (SDE)

Answer

Gross Revenue

Answer

Net Profit

Answer

Operating Income

Question 3

Which of the following is typically adjusted when calculating SDE?

Accepted Answer

Owner's compensation

Answer

Cost of goods sold

Answer

Depreciation

Answer

Interest on loans

Question 4

What does a high inventory turnover ratio generally indicate?

Accepted Answer

Strong product sales

Answer

Excessive inventory buildup

Answer

Decreasing customer demand

Answer

Poor supplier relations

Question 5

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

Accepted Answer

Similar business sales

Answer

Product pricing models

Answer

Industry regulations

Answer

Customer satisfaction surveys

Question 6

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

Accepted Answer

Tax returns

Answer

Sales brochure

Answer

Business license

Answer

Bank deposit slips