Which of the following methods for establishing the value of a business is associated with the...
Which of the following methods for establishing the value of a business is associated with the correct disadvantage of using that method?
A.Adjusted earnings method
dash–
failing to take into account the future income-generating potential of the business.
B.Adjusted earnings method
dash–
selecting an unrealistic earnings multiplier.
C.Balance sheet technique
dash–
selecting the incorrect discount rate.
D.Discounted future earnings approach
dash–
failure to consider the future earning potential of the company.
E.Adjusted balance sheet technique
dash–
inability to establish a reasonable value for the company's goodwill.
Homework Answers
The answer is option A .Adjusted earnings method -
failing to take into account the future income-generating potential of the business.
Actually the disadvantage listed is false because, it takes into Account the future earning potential of the business, that is the reason they come up with multipliers in this method.
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Which of the following methods for establishing the value of a
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