Which of the Following Valuation Methods Is Superior to the Others

question 114

Multiple Choice

Which of the following valuation methods is superior to the others in the list since it considers expected earnings?

• A) liquidation value
• B) book value
• C) P/E multiple
• D) present value of the interest

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Definitions:

Earnings Claims

Statements made by a company or franchise about the potential or actual financial performance of a business opportunity.

Reasonable Basis

A standard of evidence that suggests a belief or action is supported by a fair amount of facts or logical assumptions, often used in legal and regulatory contexts.

Franchisor

The original business or company that grants the license to third-party operators to conduct business under its name and system.

Hypothetical Basis

A theoretical foundation or scenario used for analysis or argument, often constructed to explore possibilities or outcomes.