In a small business sale, which offer is 3 times the book value?

In a small business sale, which offer is 3 times the book value?

• A. Company A
• B. Company B
• C. Company C
• D. Company D

Answer: (C)

Understanding offers as multiples of book value helps you see why a price might be considered a premium. Book value is the net asset value of a business—assets minus liabilities. When buyers price a small business, they often express value as a multiple of this base figure to reflect what they expect the company can generate beyond what is on the books. An offer described as three times the book value implies a substantial premium over the net asset value. This premium can arise from anticipated cash flows, growth potential, strong management, customer relationships, or other intangibles not fully captured in the balance sheet. So, the correct choice is the offer that states a threefold (three times) book value. For example, if the book value is $100,000, an offer of $300,000 is three times the book value. The other offers would price at different multiples and do not meet the stated criterion of being exactly three times the book value.

Understanding offers as multiples of book value helps you see why a price might be considered a premium. Book value is the net asset value of a business—assets minus liabilities. When buyers price a small business, they often express value as a multiple of this base figure to reflect what they expect the company can generate beyond what is on the books.

An offer described as three times the book value implies a substantial premium over the net asset value. This premium can arise from anticipated cash flows, growth potential, strong management, customer relationships, or other intangibles not fully captured in the balance sheet. So, the correct choice is the offer that states a threefold (three times) book value.

For example, if the book value is $100,000, an offer of $300,000 is three times the book value. The other offers would price at different multiples and do not meet the stated criterion of being exactly three times the book value.