One way to value a business includes comparing its price/earnings ratio to the price/earnings ratios of similar publicly traded companies in the same industry. This method is known as
A) price method.
B) market value method.
C) fixed assets method.
D) balance sheet method.
E) primary earnings method.

Question

Quizplus · Accepted Answer

The method described in the question is the market value method, which involves comparing the price/earnings ratio of a business to similar publicly traded companies in the same industry. This is a commonly used method for valuing businesses in the financial industry. The other choices listed (price method, fixed assets method, balance sheet method, primary earnings method) are not relevant to this particular valuation method.

One Way to Value a Business Includes Comparing Its Price/earnings