📝 One-liners · 66 cards
OTHER NON DCF VALUATION MODEL
What is the Book Value method of valuation and how is it calculated?
Book Value method values a company based on its net assets, calculated as Total Assets minus Total Liabilities (i.e., shareholders' equity) as appearing in the balance sheet.
What is the Asset-Based Valuation approach and when is it primarily used?
Values firm by summing net assets; used in asset-heavy industries.
Why is Book Value considered an unreliable standalone valuation method for mergers?
Book Value uses historical cost and ignores intangible assets, goodwill, and market realities, making it unsuitable for capturing true economic worth in M&A transactions.
What is the Price-to-Book Value (P/BV) multiple and what does a high ratio indicate?
Market price divided by book value per share; high ratio means market premium over assets.
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