The most important factor to be considered in the valuation of a closely held firm is _____.
A) earnings growth
B) book value of the firm
C) earnings capacity
D) the general economic outlook

Question

Quizplus · Accepted Answer

The earnings capacity of the firm is the most important factor in valuing a closely held firm because it reflects the potential for future earnings and cash flow generation. While general economic outlook and earnings growth may be important considerations, they do not necessarily represent the true earnings potential of the company. The book value of the firm may also be relevant, but it does not take into account the future earnings potential or the market value of the company.

The Most Important Factor to Be Considered in the Valuation