Which of the following is one of the main things to consider when evaluating a business opportunity?

• A. The proximity of the business to tourist attractions
• B. The number of employees' favorite sports teams
• C. The color of the company's logo
• D. The potential for profitability and return on investment

Answer: (D)

Verified step by step guidance

1. Understand the concept of evaluating a business opportunity: The primary goal is to assess whether the business can generate sufficient profits and provide a good return on investment (ROI). This involves analyzing financial and operational aspects of the business.
2. Step 1: Define profitability. Profitability refers to the ability of a business to generate earnings after covering all expenses. It is a key indicator of the financial health and success of a business.
3. Step 2: Define return on investment (ROI). ROI measures the efficiency of an investment or compares the efficiency of several investments. It is calculated using the formula: ROI = (Net Profit / Investment Cost) × 100.
4. Step 3: Evaluate the potential for profitability. This involves analyzing factors such as market demand, competition, pricing strategies, and cost structures to determine if the business can generate sustainable profits.
5. Step 4: Assess the potential ROI. This includes estimating the initial investment required, forecasting future cash flows, and calculating the expected return to ensure the investment is worthwhile.