Session 12: Equity Investments: Valuation Models
Reading 44: Private Company Valuation
LOS j: Demonstrate the asset-backed approach to private company valuation.
Which of the following is most accurate regarding the asset-based approach? Of the three valuation methods for private firms, it usually:
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A) |
is not difficult to apply. | |
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B) |
results in the lowest valuation. | |
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C) |
is the most appropriate for going concerns. | |
The asset-based approach is generally not used for going concerns. Because it is easier to find comparable data at the firm level compared to the asset level, the income and market approaches would be preferred to value going concerns.
Because it is difficult to find data for individual intangible assets and specialized assets, the asset-based approach can be difficult to apply. It generally results in the lowest valuation because the use of a firm’s assets in combination usually results in greater value creation than each of its parts individually.
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发表于 2010-4-20 11:27
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