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Questions and Answers
In valuation of shares, which one of the following is a commonly used method for determining the value of a business?
In valuation of shares, which one of the following is a commonly used method for determining the value of a business?
- Doubling the initial investment
- Using the company's total assets
- Discounted Cash Flow (DCF) method (correct)
- Assessing the market demand
When valuing tangible assets, which one of the following should be considered?
When valuing tangible assets, which one of the following should be considered?
- Number of employees in the company
- Depreciation and obsolescence (correct)
- Brand reputation
- The company's social media presence
What is an important consideration when valuing shares of a business?
What is an important consideration when valuing shares of a business?
- The CEO's favorite color
- Earnings per share (EPS) (correct)
- Employee satisfaction rating
- Number of Twitter followers
Study Notes
Valuation of Shares
- A commonly used method for determining the value of a business is the discounted cash flow (DCF) method.
- The DCF method estimates the present value of future cash flows expected to be generated by the business.
Valuing Tangible Assets
- When valuing tangible assets, the cost of replacement or reproduction should be considered.
- This includes the cost of acquiring or replacing the assets with similar ones.
Key Considerations
- An important consideration when valuing shares of a business is the market value of the shares.
- This includes the price at which the shares are currently trading in the market.
- Another key consideration is the earning capacity of the business, which affects the value of the shares.
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Description
Test your knowledge of valuation of shares, business, and tangible assets with this multiple choice quiz. Perfect for CS Executive and CMA exam preparation.
