LS_6. John Mayer started Mayer Architectural Associates 35 years ago and has built a stable base of clients and a sound management team. He plans to retire in a year and his key managers want to purchase the business from him, but have little equity to contribute. Given this situation, which of the following would be the most appropriate source of financing for the buyout?

a. A revolving credit b. A term loan c. A seller note d. A bridge loan

LS_5. When evaluating creditworthiness all of the following are reasons that banks and business owners focus attention on capital structure EXCEPT:

a. Appropriate capital structure insures the operating profitability of the business b. Appropriate capital structure is necessary to implement the business strategy c. Appropriate capital structure can help the business through economic downturns d. Appropriate capital structure suggests the ability to meet obligations as they come due

LS_4. Sandy's Seaside Sundries sells a range of products at the New Jersey shore, including sunscreen, beach toys, and beach apparel during the summer season. Which of the following types of financial information would be most relevant in determining both the amount and duration of a seasonal financing need for the company?

a. Three years of company tax returns b. Audited statement and a six-month interim c. Five-year annual Projections d. Monthly cash budget or interims