Final Exam - Valuation Concepts and Methods

The dividend paying capacity method, sometimes referred to as the dividend payout method, is an income-oriented method but is considered a market approach as it is based on market data.

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• False

EBITDA can serve as a proxy of cash flows from operating activities before tax.

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• False

The market value method calculates the value of your business at a given moment in time by looking at your balance sheet.

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• False

Dividend Yield Ratio is also known as dividend multiple and is a pricing multiple.

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• False

Similar to the capitalization of earnings valuation method, the multiple of earnings valuation method also determines a business’ value by its potential to earn in the future.

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• False

Dividend Yield Ratio describes the relationship between the dividends received per share and the appreciation of the book value of the company.

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• False

An ROI-based business valuation method evaluates the value of your company based on your company’s profit and what kind of return on investment (ROI) an investor could potentially receive for buying into your business.

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• False

If Book-to-Market approach is used for comparable company analysis, the key component of the financial statement needed is the Balance Sheet.

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• False

From a legal perspective, there are different types of mergers like short form merger, statutory merger, subsidiary merger, and merger of equals.

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• False

Comparative private company sales data is formerly known as comparative transaction method.

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• False