Which of the Following Correctly Lists the Conditions When the Multiples

question 17

Multiple Choice

Which of the following correctly lists the conditions when the multiples valuation of a subsidiary is appropriate?

• A)The subsidiary is publicly traded,and the parent owns less than 20 percent of the subsidiary.
• B)The subsidiary is not publicly traded,and the parent owns less than 20 percent of the subsidiary.
• C)The subsidiary is publicly traded,and the parent owns between 20 percent and 50 percent of the subsidiary.
• D)The subsidiary is not publicly traded,and the parent owns between 20 percent and 50 percent of the subsidiary.

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Definitions:

Liabilities

Obligations a company owes to external parties, which can include loans, accounts payable, mortgages, and other debts due.

Assets

Resources owned by a company or individual that have economic value and can be used to meet debts or commitments.

Retained Earnings

The portion of a company's profits that is kept or retained and not distributed as dividends to shareholders, used for reinvestment in the business or to pay debt.

Common Shares

Equity securities that represent a portion of the ownership of a corporation, typically granting voting rights and dividends.