12 Questions
What is the primary objective of using pricing methods in business valuation?
To enable the analyst to determine the value of the company based on similar businesses in the industry
Who are considered experts in estimating likely business selling prices?
Business intermediaries
What is the Heuristic pricing rules method based on?
Expert opinion of professional practitioners
What is an advantage of using the Heuristic pricing rules method?
Pricing multiples based on expert opinion are made available
What is a limitation of using the Heuristic pricing rules method?
Pricing multiples may not be sufficiently backed by rigorous statistical analysis
What does EBITDA primarily represent?
Net amount of revenue after deducting operating expenses and before deducting financial fixed costs, taxes and non-cash expenses
What is a concern when using the Heuristic pricing rules method for non-brokered business deals?
Availability of information
What is EBITDA Multiple primarily used to determine?
The value of the market per share
How is EBITDA per share typically derived?
By dividing EBITDA by outstanding share for common equity or ordinary shares
What is the purpose of adjusting EBITDA to incorporate costs relative to other quantified risks?
To generate a more conservative EBITDA result
What are the three main differences considered in comparable company analysis?
Strategy, Structure and Size
What is the primary tool used in comparable company analysis?
EBITDA Multiple
Test your knowledge of EBITDA, a financial metric that estimates a company's cash flow from operating activities before taxes. Learn how to compute EBITDA and its significance in financial analysis.
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