If a businessperson is asked about what goes into consideration when purchasing a business, the number one answer should be:
How much cash can be generated from the business?
Other answers, though important, are of secondary importance, such as:
What is the business worth?
Who is the biggest competitor?
What is motivating the seller of the business?
Therefore, the businessperson when purchasing a business should examine the business aspects of his investments. This involves looking at:
1. the income statements
2. the capital reinvestment requirements, and
3. the cash generating capabilities of the business or investments.
How much cash can be generated from the business?
Other answers, though important, are of secondary importance, such as:
What is the business worth?
Who is the biggest competitor?
What is motivating the seller of the business?
Therefore, the businessperson when purchasing a business should examine the business aspects of his investments. This involves looking at:
1. the income statements
2. the capital reinvestment requirements, and
3. the cash generating capabilities of the business or investments.
http://myinvestingnotes.blogspot.com/2014/01/asking-one-most-important-question-how.html
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