BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Capital cost
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Market price of shares
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Both (a) and (b)
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None of these
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Detailed explanation-1: -Business valuators give consideration to a range of factors: interest rates; local, state and national economies; industry information; financial data; and, very importantly, company-specific characteristics.
Detailed explanation-2: -Absolute value models value assets based only on the characteristics of that asset, such as discounted dividend, discounted free cash flow, residential income and discounted asset models. Relative valuation ratios, such as the P/E ratio, help investors determine asset valuation by comparing similar assets.
Detailed explanation-3: -A business valuation might include an analysis of the company’s management, its capital structure, its future earnings prospects or the market value of its assets. The tools used for valuation can vary among evaluators, businesses, and industries.
Detailed explanation-4: -Income is a major factor in the valuation of any business. Particularly, someone appraising the value of a business will look at historical trends in your income.