a. The market value of the comps should be available.   b. The valuation object should be compared with similar firms, preferably in industry, size, market and other measures.  c. The market value of the valuation object should be available.  d. The prices of the comps should be standardized, meaning a price ratio instead of the absolute price value should be compared

Q: Whether the firm uses the​ market-based approach or the​ cost-based approach for pricing​ decisions,…

A: Introduction: Market based approach: For calculating the selling price of Asset firm uses market…

Q: For technical analysis, based on patterns of historical prices, to have value, ______ form of market…

A: Weak form efficiency market hypothesis is an element of efficient market hypothesis which states…

Q: What is the difference between the ratios that use the market price and the other ratios? Why might…

A: Ratio analysis mistreatment money statements includes accounting, securities market, and management…

Q: explain how sunk costs create a barrier to entry into the market place.

A: Sunk costs are expenses that can not be retrieved if a corporation wishes to leave a market.

Q: What is the Joint Hypothesis and what are its implications for tests of asset pricing models?

A: The Capital Asset Pricing Model (CAPM) is a model that explains the relationship between expected…

Q: The higher the anticipated return on net operating assets (RNOA) relative to the anticipated growth…

A:

Q: Whatever demanders want in a product in a quantitative sense

A: In economics, the quantity demanded refers to the total amount of a specific good or service that…

Q: Should we use (1) total sales, (2) EBITDA, (3) EBIT, or (4) net income to evaluate firm…

A: The choice of financial performance indicators to use depends on the specific goals and…

Q: The relationship of theory to measurement is very important. Measurement is the assignment of…

A: Arguments for the use of historical cost:1. Objectivity: Historical cost is based on actual…

Q: In a transfer pricing decision, which of the following factors should be considered?    Both A and B…

A: Transfer pricing refers to the pricing strategy and decisions made within transnational companies…

Q: What is lower of cost/market, and why is it used? Provide an example.

A: Inventory is a term which depicts the amount of finished goods prevailing in the business. The…

Q: Create an example showing how residual income is calculated. What information is used in computing…

A: Return on investment (ROI):   Return on investment evaluates how efficiently the assets are used in…

Q: 1: Medicare tax A. Mandatory В. Voluntary 2: State income tax withholding A. O Mandatory В.…

A: Mandatory requirements are the necessary and important that need to be complied irrespective of…

Q: a) Describe the features of a perfect market and explain the difference between Allocational…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: What information is needed to measure the absolute profitability of a segment?

A: Absolute profitability measures are defined as the measure, which used to impact an overall profits…

Q: Why must financial statements be relevant? Name and discuss the 3 items that make Financial…

A: The relevance of financial statements is crucial because they provide information that is useful to…

Q: What is the Fama-MacBeth Method in asset pricing assumptions?

A: Fama Mac Beth method is kind of regression method used for determining of parameters for like CAPM…

Q: Explain how the lower of cost and net realizable value rule is applied to purchase commitments.

A: Purchase Commitments: It refers to the commitments or contract made by a company with its suppliers…

Q: e main hindrances in valuation estimates in busiiness valuation?

A: Introduction Knowing how much an asset is worth and what factors influence its value is critical for…

Q: How would you explain Valuation Principles and Law of One Price in simple language to someone…

A: Valuation principles and the law of one price are fundamental concepts in economics and finance that…

Q: What are the main criticisms of the Capital Asset Pricing Model (CAPM)? What does the empirical…

A: Capital Asset Pricing Model is a financial theory stating the linear relationship between required…

Q: State why payback analysis should be used only as a supplemental analysis tool when an economic…

A: Payback analysis is the method for calculating payback period of an investment. Payback period is…

Q: 1.  Discuss factors that a company might look at when determining prices for its products.

A: The factors determining the price of the company's product is given below, Cost of production- The…

Q: Fair Value Accounting and Valuation in 3 Steps:   Asset or Liability Identification: The first…

A: Fair value is an amount that usually a person gets when he sells the asset or an amount paid to…

Q: What analysis ensures that the income for the firm will cover its variable costs?    a. ratio…

A: Companies need to analyse how many products to sell or how much sales to make in a financial year to…

Q: What is the total revenue of the reportable segments after considering the quantitative thresholds…

A: The reportable segments are those segments which have to be shown and to be declared by the company…

Q: Degreed accountants have the opportunity to obtain specialized certifications in various accounting…

A: Accreditations in Accounting Information Systems (AIS) are important qualifications that show…

Q: Is it good, fair or bad if price earning ratio is higher than industry average in terms of…

A: In terms of cross-sectional evaluation, a higher price-earnings ratio (P/E ratio) than the industry…

Q: Which valuation method is dependent on a calculation of terminal value? a) DCF b) Comparable…

A: Option C is correct.

Q: Identify the importance of marginal and absorption costing on profit determination and inventory…

A: In the costing method known as marginal costing, the fixed cost for the period is entirely written…

Q: Describe three limitations of the economic, profitmaximizing model of pricing.

A: Profit maximizing price: The price for which the relative quantity is identified by the intersection…

Q: Relative valuation has several advantages relative to other valuation techniques.Which of the…

A: An advantage of relative valuation is:Ease of Use and Understanding:Relative valuation is often…

Q: Explain briefly how do you understand the concept of Cost of Good Sold. (In your own understanding

A: The cost of Good sold is an important matrix that is used in the accounting in finance in order to…

Q: What is the primary disadvantage of basing the costplus pricing formula on absorption cost?

A: Definition: Cost plus-pricing approach: The pricing approach used by the companies to set the target…

Q: lease identify what types of companies would use market-based pricing versus what type of companies…

A: Market-based pricing refers to the pricing strategy that is based on the market environment.…

Q: Analyze the following statement: When purchasing power parity really holds, comparative advantage…

A: An exchange rate is the price of one currency against another. Exchange rates are either fixed or…

Q: Given the weaknesses of cost-based pricing, why wouldany company use this method?

A: Cost-based pricing means setting prices based on the cost of goods and services.  The major…

Q: Which of the following transfer price approaches is used when the transfer price is set at the…

A: Transfer Price  : Price at which related parties transact with each other is known as transfer…

Q: In the context of relative valuation , the P/S should always be greater than thr EV/ revenue ratio

A: P/S refers to price to sales ratio = total market capitalization of the company/total sales of the…

Q: How to incease profitability if PE Ratio, EPS Ratio, and ROE cannot be calculated because of its…

A: Accounting refers to the process of recording, summarizing, interpretation and communicating the…