Which of the Following Statements Is True of the Business

question 67

Multiple Choice

Which of the following statements is true of the business valuation principle?

• A) As per first valuation principle, the value of business does not change over time.
• B) The value of a business is solely affected by managers' financing decisions.
• C) The fair market value of a business is the value of that business to a hypothetical person who is knowledgeable about the business.
• D) Estimating the fair market value of a business includes the value of synergies or the effects of any investor-specific management style.

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Definitions:

Stockholders

Individuals or entities that own shares in a corporation, giving them partial ownership and potentially a claim on its profits.

Millions

A numerical value representing one thousand thousands, or 1,000,000.

Cash Flow

The total amount of money being transferred into and out of a business, often used as an indicator of financial health.

Assets

Resources owned by a company that have economic value and can be converted into cash.