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HIsPoCratiC HIsPoCratiC
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Posts: 903
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7 years ago
Mary Ann is considering buying an existing catering business that is up for sale. The current owners claim that the business is highly profitable, but Mary Ann has her doubts. She also thinks that the price that they are asking seems high. In reviewing the financial statements of the catering business, she discovers that the current balance sheet shows that the business has more liabilities than assets. Why would this explain why the owners want to sell the business?
Textbook 
Business Essentials, Canadian Edition

Business Essentials, Canadian Edition


Edition: 8th
Authors:
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wrote...
#1
7 years ago
The current owners face a negative owners' equity, which means that they might not be able to settle any debts that are due soon. Thus, they would not be able to stay in business for very long. The type of liabilities and assets could be a factor. For example, the assets may not be very liquid, and the liabilities may be current (debts that must be paid within one year) or long-term (debts that are not due for at least a year).
HIsPoCratiC Author
wrote...
#2
6 years ago
Thanks for confirming, I was going to write that
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