In the excess-earnings approach to business valuation,the earnings of comparable companies are needed to set the valuation of the company.

Question

Quizplus · Accepted Answer

The excess-earnings method primarily involves separating the return on assets from the total earnings to isolate the excess earnings, which are then used to estimate the value of the business's intangible assets. It does not directly require the earnings of comparable companies.

In the Excess-Earnings Approach to Business Valuation,the Earnings of Comparable