Group 8

Question 1

is the process of determining the economic value of a business. also known as a company .valuation

Answer 1

business valuation

Question 2

all areas of a business are analyzed to determine its worth and the worth of its departments or units.

Answer 2

business valuation

Question 3

is typically conducted when a company is looking to sell all or a portion of its operations or looking to merge with or acquire another company.

Answer 3

Business valuation

Question 4

A business valuation might include an analysis of the company’s management, its _________, its _______ or the __________.

Answer 4

its capital structure, its future earnings prospects or the market value of its assets.

Question 5

is the simplest method of business valuation. It is calculated by multiplying the company’s share price by its total number of shares outstanding.

Answer 5

Market capitalization

Question 6

a stream of revenues generated over a certain period of time is applied to a multiplier which depends on the industry and economic environment

Answer 6

times revenue business valuation method,

Question 7

used to get a more accurate picture of the real value of a company, since a company’s profits are a more reliable indicator of its financial success than sales revenue is.

Answer 7

EARNINGS MULTIPLIER

Question 8

is similar to the earnings multiplier. This method is based on projections of future cash flows, which are adjusted to get the current market value of the company.

Answer 8

DISCOUNTED CASH FLOW (DCF) METHOD

Question 9

This is the value of shareholders’ equity of a business as shown on the balance sheet statement.

Answer 9

BOOK VALUE

Question 10

is derived by subtracting the total liabilities of a company from its total assets.

Answer 10

book value

Question 11

is the net cash that a business will receive if its assets were liquidated and liabilities were paid off today.

Answer 11

Liquidation value

Question 12

is a professional designation awarded to accountants such as CPAs who specialize in calculating the value of businesses.

Answer 12

Accredited in Business Valuation (ABV)

Question 13

can be defined as the total value of the company that is attributable to equity investors. commonly referred to as the market value of equity or market capitalization.

Answer 13

Equity value,

Question 14

It is calculated by multiplying a company’s share price by its number of shares outstanding.

Answer 14

EQUITY VALUE

Question 15

• It is calculated by multiplying a company’s share price by its number of shares outstanding
• the difference between a company’s assets and liabilities.

Answer 15

equity value; book value or shareholders’ equity

Question 16

is simply calculated by multiplying a company’s share price by the number of basic shares outstanding.

Answer 16

Basic equity value

Question 17

enterprise value formula

Answer 17

enterprise value = equity value + debt + preferred stock + non-controlling interest – cash and cash equivalents

Question 18

equity value formula

Answer 18

equity value = enterprise value – debt and debt equivalents – non-controlling interest – preferred stock + cash and cash equivalents

Question 19

are used to value companies, with the exception of a few industries such as banking and insurance, where only equity value is used.

Answer 19

equity value and enterprise value