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What Are Some Implicit Assumptions That Are Made When Valuing

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


Definitions:

Fixed Costs

Expenses that do not change in relation to the level of goods or services produced within a certain period, such as rent or salaries.

Short Run

A period in which at least one input is fixed while others may be varied to adjust output levels.

Long Run

The long run is a period in economics where all factors of production and costs are variable, allowing companies to adjust all inputs.

TVC

Total Variable Cost, which refers to the total of all costs that vary with the level of output in the production of goods or services.

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