The valuation approach that gives the lowest value of the business is the earnings approach.

Question

Quizplus · Accepted Answer

The earnings approach is one of the three primary valuation approaches and it values a business by estimating its future earnings and applying a multiple or capitalization rate to determine its present value. While the earnings approach may result in a lower value than other approaches, such as the market approach or asset approach, it is not always the lowest. The outcome of the valuation ultimately depends on the specific business being valued and the methodology used.

The Valuation Approach That Gives the Lowest Value of the Business