Question

Considering the scenario with Lori and Zenlon Inc., and her intention to sell the business:

Select the correct statement:
a) Lori, as the sole shareholder, has no influence on the value of Zenlon Inc.
b) Lori should not consider the financial information when determining the value of her company.
c) The value of Zenlon Inc. is irrelevant in the selling process.
d) Lori should consider financial information and various factors when determining the value of Zenlon Inc.

Answer 1

Lori should evaluate financial information and a range of factors to establish her company's value, directly influencing her ability to negotiate an appropriate selling price.

Step-by-step explanation:

The correct statement regarding the valuation of Zenlon Inc., owned by Lori, is that she should indeed consider financial information and various factors to determine the value of her company. These factors include current earnings, potential for future growth, the firm's liabilities, and assets. As a sole shareholder, Lori has a significant influence on the company's value. An accurate valuation process is crucial because it affects the selling price and can influence the potential buyers' decisions. The company's value is derived from not just its current state, but from its strategic position, market opportunities, and the strength of its operations, all of which are intertwined with the financial metrics that indicate the business's health.