Question

John wants to buy an existing business that is for sale the owner claims that the business is highly profitable but john has his doubts.What suggestions would you give john to clarify his doubts regarding the financial standing of the business . And explain how the suggestion would have helped john in making the right decision. If John decided to purchase the business what planes do you think he must have In place? give specific examples of each of the three types of planning with regards to John's business.

Answer 1

If John wants to buy an existing business, he should be always looking at various key indicators of business related to the performance of the past such as financial ratios, cash flows of business, balance sheet of the business, income and receipt of the business, to get a fair idea about the operational performance and the profitability of the business so that he can make up his mind in order to purchase the business or avoid the business.

Three types of planning, he needs to do in case he wants to buy the business will be-

A. Strategic planning which will involves the major objective of the organisations.

B. tactical planning which is focused at implementation of strategic planning at the medium levels

C.operational planning which is used to determine the performance of each department of segment and it is related to a specific operations at lower level