Which of the following statements is FALSE? In the method of comparables, we estimate the value of
Question:
Which of the following statements is FALSE?
In the method of comparables, we estimate the value of the firmbased on the value of other, comparable firms or investments thatwe expect will generate very similar cash flows in the future. | ||
Even two firms in the same industry selling the same types ofproducts, while similar in many respects, are likely to be ofdifferent size or scale. | ||
A valuation multiple is a ratio of some measure of the firm'sscale to the value of the firm. | ||
Consider the case of a new firm that is identical to an existingpublicly traded company. If these firms will generate identicalcash flows, the Law of One Price implies that we can use the valueof the existing company to determine the value of the new firm. |
Auditing a risk based approach to conducting a quality audit
ISBN: 978-1133939153
9th edition
Authors: Karla Johnstone, Audrey Gramling, Larry Rittenberg