Which of the Following Statements Is True of Business Valuation

question 37

Multiple Choice

Which of the following statements is true of 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:

Total Sales Revenues

The total amount of money generated from the sale of goods or services before any expenses are subtracted.

Total Costs

The sum of all costs associated with the production of goods or delivery of services, including both fixed and variable costs.

Cost-volume-profit Analysis

A financial management tool that helps in determining the effects of changes in costs and volume on a company's profits.

Fixed

Pertaining to costs or assets that do not fluctuate with changes in production level or business activity.