What is the primary purpose of business valuation?
Business valuation determines the economic worth of a business for purposes such as mergers, acquisitions, or financial reporting.
Which valuation method is based on projected future cash flows?
The Discounted Cash Flow (DCF) method values a business by estimating future cash flows and discounting them to their present value.
What is the key advantage of using the market approach for business valuation?
The market approach compares similar businesses in the industry to determine a company's valuation based on real market transactions.
Why is goodwill an important factor in business valuation?
Goodwill represents a company’s intangible assets, such as brand reputation and customer loyalty, that add to its market value.
Which factor is most important when determining a business's valuation?
Revenue, profitability, market conditions, and industry trends are all critical factors in determining business valuation.
What is the role of an appraiser in business valuation?
A business appraiser provides an objective assessment of a company's worth using standardized valuation methodologies.