The balance sheet technique of determining a business's value uses the company's net worth or owner's equity as the firm's value,but it oversimplifies the valuation process.

Question

Quizplus · Accepted Answer

The balance sheet technique only considers the net worth or owner's equity and does not take into account other important factors such as future earning potential, market conditions, industry trends, and management capabilities. Therefore, it oversimplifies the valuation process and may not provide an accurate estimate of a business's true value.

The Balance Sheet Technique of Determining a Business's Value Uses