Income-Based Methods of Business Valuation

Income-based valuation involves capitalizing present or future cash flows to determine a company's value. It differs from market-based and asset-based approaches by focusing on the company's ongoing operations. However, future cash flows are speculative, posing challenges. Common methods include earnings capitalization, discounted cash flow, and economic value added.

What is the primary focus of income based valuation?

How does income based valuation differ from market based and asset based approaches?

Explain the concept of 'going concern' in the context of income based valuation.

What are the potential issues with relying on future cash flows in income based valuation?

What are some common approaches to income based valuation mentioned in the text?