Which one of the following computes value based on annual earnings?
A)Discounted cash flow method.
B)Cash flow liquidity method.
C)Multiples-based method.
D)Profitability method.
E)Purchasing power method.

Question

Quizplus · Accepted Answer

Multiples-based method computes value by comparing the company's earnings to a benchmark or similar companies in the industry. This method is based on the idea that companies with similar earnings should have similar valuations. Therefore, the value is calculated based on the multiple of earnings. It can be computed based on annual earnings.

Which One of the Following Computes Value Based on Annual