When Using the Multiples Analysis Approach to Valuing a Business

question 53

Multiple Choice

When using the multiples analysis approach to valuing a business, one must be aware:

• A) of the presence of a marketability premium that can be sizable.
• B) of the adjusted book value of a business which is the cost of duplicating the assets of the business in their present form as of the valuation date.
• C) of the stock value of similar companies whose shares are not publicly traded.
• D) of the presence of a potentially large marketability discount.

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Definitions:

Phosphorylation

A biochemical process that involves the addition of a phosphate group to a molecule, often altering its function.

Filtration

A process that separates materials based on the ability of one material to pass through a membrane or layer, while others are retained.

Secretion

This is the process by which substances are produced and discharged from a cell, gland, or organ for a particular function in the organism or for excretion.

ADH

Antidiuretic hormone, a hormone produced by the pituitary gland that regulates the balance of water in the body by reducing the amount of water excreted in urine.