Busıness Fınance Iı Deneme Sınavı Sorusu #1024237
"Income-based valuation _____."
Which of the following most appropriately completes the sentence above?
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uses “market multiples” to calculate the value of the target company. |
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focuses on finding the fair value of the company, depending on the future cash |
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focuses on company assets’ acquisition costs reflected in records. |
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is the value of assets minus value of liabilities of a firm |
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is the value of assets that are recorded at a date, at a value, by accounting |
Income-based valuation: Income-based valuation focuses on finding the fair value of the company, depending on the future cash flows. The key of income-based valuation is future cash flows that a company will generate. The value of a company then, is the sum of present value of its future net cash flows. Calculation of future cash flows is not an easy task, though. It includes long-term business plans, growth plans, and risks associated with future cash flows. After calculating net cash flows, they are discounted at an appropriate discount rate.
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