In valuing a company that sells products and services, is the most important factor in the valuation of closely held firms.
A)management effectiveness
B)profit
C)cash on hand
D)earnings capacity

Question

Quizplus · Accepted Answer

Earnings capacity is the most important factor in the valuation of closely held firms because it takes into account both the current profitability and the potential for future growth. While management effectiveness, profitability, and cash on hand are important factors to consider, they do not provide a full picture of the company's overall value. Earnings capacity considers the company's historical financial performance and future growth potential, which is essential for making informed investment decisions.

In Valuing a Company That Sells Products and Services, Is