Which of the following methods is a logical selection when engaged to value a nonoperating company or a company pending liquidation?
A) net asset value method
B) dividend payout method
C) capitalization of earnings method
D) guideline transaction method

Question

Quizplus · Accepted Answer

The most suitable method to value a nonoperating company or a company pending liquidation is the net asset value method. This method calculates the value of a company's assets minus the value of its liabilities, giving an estimate of the company's equity. As the company is not engaged in operations or has ceased operations, other methods like capitalization of earnings or guideline transaction method may not be the appropriate choice. The dividend payout method is used to calculate the value of a company based on its dividend payments, but it may not be applicable for a company that is pending liquidation.

Which of the Following Methods Is a Logical Selection When