Valuation of High Growth Companies Quiz
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Questions and Answers

Which valuation approach is typically used for high growth companies in addition to probability-weighted scenarios?

  • DCF
  • APV (correct)
  • Comparables
  • None of the above

    • Which of the following statements about high-growth companies is correct?

  • High-growth companies usually have organic revenue growth below 15% annually
  • There is a universal method that fits all firms when projecting revenues (correct)
  • High-growth companies are primarily mature firms
  • High-growth companies always have a return on equity below 15% annually

    • Why is historical financial performance often misleading for high-growth companies?

  • Long-term investments for high-growth companies tend to be intangible (correct)
  • High-growth companies rarely issue shares
  • High-growth companies do not have historical financial records
  • Long-term investments for high-growth companies are always tangible

    • If a venture plans to issue an additional 25% of the total number of shares outstanding, what is the retention ratio for the current investors?

    <p>0.8</p> Signup and view all the answers

    In what order should the steps for valuing using the Venture Capital method be arranged?

    <p>II, IV, I, III</p> Signup and view all the answers

    Which of the following is NOT mentioned as a characteristic of high-growth companies?

    <p>Having tangible long-term investments</p> Signup and view all the answers

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