Which one of the following is not a commonly used method of valuing target firms?
A) Discounted cash flow
B) Comparable companies method
C) Recent transactions method
D) Asset oriented method
E) Share exchange ratio method

Question

Quizplus · Accepted Answer

Share exchange ratio method is not a commonly used method of valuing target firms, whereas the other options are commonly used methods. The discounted cash flow method involves estimating the future cash flows of the target firm and discounting them to their present value. The comparable companies method involves comparing the target firm to other similar firms in the industry and using their valuations as a benchmark. The recent transactions method involves looking at recent transactions in the industry and using them to estimate the value of the target firm. The asset oriented method involves valuing the assets of the target firm and subtracting its liabilities to arrive at its net asset value.

Which One of the Following Is Not a Commonly Used