Which of the following valuation techniques is best suited for determining the value of service businesses?
A) Discounted future earnings approach
B) Balance sheet technique
C) Adjusted balance sheet technique
D) Excess earnings approach

Question

Quizplus · Accepted Answer

The discounted future earnings approach is best suited for determining the value of service businesses as it takes into account the expected future cash flows generated by the business. Service businesses typically rely heavily on intangible assets such as customer relationships, brand recognition, and reputation, which can be difficult to value using traditional balance sheet techniques. The discounted future earnings approach allows for a more comprehensive analysis of the value drivers for service businesses.

Which of the Following Valuation Techniques Is Best Suited for Determining