Week 1 Valuation 2 - They will have more information to...

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The balance sheet method – which computes a company’s net worth be subtracting their liabilities from their assets. This approach may be best suited to a company who has at least had a chance to track their financials for a quarter or more. The earnings approach – also considers future income potential. This may be a better approach for a more established company that has reported their financials for more than just one quarter.
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Unformatted text preview: They will have more information to work with in predicting and forecasting future earnings. The market approach-uses the p/e ratio of similar companies to establish the value of a company. This would be a better approach for a new company that has not had a chance to report their finances....
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