What Are Some Implicit Assumptions That Are Made When Valuing

question 59

Essay

What are some implicit assumptions that are made when valuing a firm using multiples based on comparable firms?

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Definitions:

Paying Late

Paying late refers to the action of failing to meet the due date for a financial obligation, which can lead to late fees, interest charges, and negative impacts on credit scores.

Credit Terms

Statements of the credit period and any discounts offered—for example, 2/10, net 30.

Discount Period

The time interval between when a bill of exchange is issued and its payment date, during which the bill is sold at a discount from face value.

2/10, Net 30

A common credit term indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days, otherwise, the full invoice amount is due in 30 days.