Which of the following valuation methods is superior to others in the list since it considers expected earnings?
A) liquidation value
B) book value
C) P/E multiple
D) present value of the interest

Question

Quizplus · Accepted Answer

The P/E (price-to-earnings) multiple is regarded as superior, as it considers expected earnings in determining the value of a company. The liquidation value and book value do not take into account future earnings potential, while the present value of interest is more applicable in debt investments rather than equity valuation.

Which of the Following Valuation Methods Is Superior to Others