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Infotech And Valuation > Valuation Midterm > Flashcards

Valuation Midterm Flashcards

1
Q

RTU Mission and Vision

A
  • to provide competent and socially responsible professionals through innovative instructions, high-impact research, and sustainable extension services responsive to diverse needs to local communities
  • a smart and transnational university
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2
Q

Key Principles in Valuation

A

Key Principles in Valuation
1.The Value of a business is defined only at a specific point in time.
2. Value varies based on the ability of business to generate future cash flows.
3.Market dictates the appropriate rate of return for investors
4. Firm value can be impacted by underlying net tangible assets
5. Value is influenced by the transferability of future cash flows, and
6. Value is impacted by liquidity

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3
Q

how much a particular object is worth a particular set of eyes

A

value

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4
Q

according to the CFA Institute, _____ is a estimation of an asset’s value

A

valuation

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5
Q

valuation places great emphasis on the ______ that are associated in the exercise.

A

professional judgement

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6
Q

value of a business three major factors

A

current operations
future prospects
embedded risks

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7
Q

value of business that shows how is the operating performance

A

current operations

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8
Q

value of business that reflects what is the long term and strategic decision

A

future prospects

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9
Q

value of business that hows what are the business risks involved

A

embedded risk

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10
Q

assuming there is a hypothetically complete understanding

A

intrinsic value

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11
Q

companies who are severe financial distress

A

liquidation value

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12
Q

going concern assumption

A

going concern value

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13
Q
  • price express in terms of cash equivalents
  • compulsion to buy or sell and when both have reasonable knowledge of the relevant facts.
A

fair market value

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14
Q

financial managers managing the investment portfolio

A

portfolio management

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15
Q

person who are interested in understanding and measuring the intrinsic value of a firm

A

fundamental analysis

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16
Q

refer to the characteristics of an entity

A

fundementals

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17
Q

who is tend to look for companies of an entity

A

activist investors

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18
Q

imply investors psychology and will predict the future movements in stock prices

A

chartists

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19
Q

getting information about firms

A

information traders

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20
Q

under portfolio management, the following activities can be performed through the use of valuation techniques

A

stock selection
deducing market expectation

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21
Q

separating a segment or component of business

A

spin off

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22
Q

sale of a major component or segment of a business

A

divestiture

23
Q

two companies combined to form a wholly new entity

A

mergers

24
Q

buying firm and the selling firm

A

acquisitions

25
Q

acquisitions of another business by using significant debt

A

leveraged buy-out

26
Q

_____ assumes that a combine value of two firms will be greater that the sum of separate firms

A

synergy

27
Q

____ deals with prioritizing and distributing financial resources

A

corporate finance

28
Q

key principles in valuation refers to business tend to change every day as transaction happens

A

the value of a business is defined only at a specific point in time

29
Q

refers to the possible range of value

A

uncertainty

30
Q

key principles in valuation refers to general concepts for most valuation techniques put emphasis on future cash flows

A

values varies based on the ability of business to generate future cash flows

31
Q

key principles in valuation refers to market forces are constantly changing, and they normally provide guidance of what rate of return should investors expect

A

market dictates appropriate rate of return for investors

32
Q

key principles in valuation refers to business valuation principles took at the relationship between operational value of an entity and net tangible of its assets

A

firm value can be impacted by underlying net tangible assets

33
Q

key principles in valuation refers to transferability of future cash flows is also important especially to potential acquirers

A

value is influenced by transferability of future cash flows

34
Q

key principles in valuation refers to the principle is mainly dictated by the theory of demand and supply

A

value is impacted by liquidity

35
Q

yield future economics benefits as a result of past transactions

A

asset

36
Q

they will grow in the future because of historical proof

A

brown field investments

37
Q

benefits of having a sound enterprise-wide risk management system

A
  • manage performance of all business risks
  • enhance business resilience against changes
  • improve distribution of resources across the firm
38
Q

advantages of using asset-based methods

A

enables stakeholders to validate firm value based on the value of assets it currently own

39
Q

value recorded in the accounting books

A

book value

40
Q

receivables that are collectible after 60days

A

current assets

41
Q

net book value of assets

A

total shareholders’ equity

42
Q

book value also reflects

A

historical value

43
Q

books values has its advantages except

A

validated by a third party expert with knowledge on how much assets are sold in the open market

44
Q

cost of similar assets

A

replacement cost

45
Q

affects the replacement value except

A

original acquisition cost of the asset

46
Q

value of the insurance premium

A

replacement cost

47
Q

valuators tend to consult with

A

appraisers

48
Q

difference of book value and replacement value

A

bv can be computed form the financial statements while rv is gathered by employing services of an appraiser.

49
Q

method is appropriate in valuing assets

A

book value method

50
Q

reproduction value method is appropriate except

A

business that use equipment supplied by the third party manufacturer

51
Q

reproduction value

A

estimate of cost of reproducing, creating, developing or manufacturing a similar asset internally

52
Q

limitation imposed by the use of reproduction value method

A

difficulty in validation reasonables of calculated value because of limited comparators

53
Q

show the most recent value of the firm assets

A
  • replacement value method
  • liquidation value method
  • reproduction value method
54
Q

deduct the asset value

A

total liabilities

Infotech And Valuation (1 decks)

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