Which of the Following Is NOT an Accepted Approach for Determining

question 85

Multiple Choice

Which of the following is NOT an accepted approach for determining a business's worth?

• A) The Net Worth Method
• B) The Net Income Method
• C) The Return on Investment Method
• D) The Price-Earnings Ratio Method
• E) The Outstanding Shares Method

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Definitions:

Minimum Required Rate of Return

The lowest rate of return that a potential investment must offer to be considered acceptable, taking into account the investor's cost of capital and risk appetite.

Annual Turnover

The total sales or revenue a company generates in one year.

ROI Analysis

A financial metric used to evaluate the efficiency of an investment or compare the efficiency of several different investments, calculated by dividing the net profit from the investment by the initial cost of the investment.

Net Operating Income

The income generated from normal business operations, calculated as revenues minus operating expenses and excluding income from investments and taxes.