The Stand-Alone Method

question 79

Multiple Choice

The stand-alone method:

• A) Is not a recognized method for allocating support department costs
• B) Eliminates uncertainty when allocating support department costs
• C) Cannot be used in retail organizations
• D) Allocates common costs based on information about individual users

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Definitions:

Enterprise Multiple

A valuation metric that compares a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA).

Enterprise Value

A measure of a company's total value, often used as a more comprehensive alternative to equity market capitalization.

EBITDA

Earnings Before Interest, Taxes, Depreciation, and Amortization, a measure of a company's overall financial performance.

Net Working Capital Turnover

A ratio that measures how effectively a company is using its net working capital to generate sales.