Capital expenditures are a specific component in the discounted or capitalized net cash flow methods. When using a market comparison approach to valuation, capital expenditure requirements may influence:
A. Valuation multiples chosen if the subject company's capital expenditure requirements are significantly different relative to guideline companies
B. Growth in working capital
C. Excessive or inadequate working capital
D. Net working capital
The business's capital requirements play a part in the valuation because they are an integral part of estimating net cash flow and dividend-paying capacity. Capital requirements include such items EXCEPT:
A. Capital expenditures
B. Remedying deferred maintenance
C. Increasing working capital
D. Decreasing prepaid expenses
The analyst should compare the backlog on the valuation date with that on previous dates. Such comparison, especially with the backlog one year prior to the valuation date, is one of:
A. The company's future prospects
B. Indication of process continuous process delay
C. The company's order blockage phenomenon
D. The future availability of suppliers
When it comes to related party transactions, it is important that the analyst gather:
A. As much information as is available in order to determine the nature of the transactions and their propriety
B. Related part transactions information
C. The list prepared that describes the terms of the transactions
D. Information regarding loans to and from related parties, leases, or purchases
A valuation of the assets can even be important in ___________ in which a weighted average cost of capital method is used if the analyst uses the asset base as a determinant of the amount of debt that the company can support.
A. Labor-intensive companies
B. Capital-intensive companies
C. Blue chip companies
D. Growth companies
The amount of detail desired in the inventory list varies from one appraisal to another, depending upon:
A. The inventory's importance to the valuation conclusion
B. The company's write-down value
C. To the extent to which inventory accounting methods vary within particular industry
D. The amount of inventory data to be gathered
_____________________ list can yield insight into the company's profitability, liquidity and even viability. However, many relatively small companies do not prepare them.
A. Receivables list
B. Aged receivables list
C. Prepaid expense list
D. Inventory list
The purpose/s of requesting financial information, in the valuation process, regarding equipment lists, aged receivables, aged payables and prepaid expenses is/are:
A. To give the analyst familiarity with the accounting policies of the company
B. To alert the analyst to special situations that could affect the valuation
C. Such information may assist in distinguishing excess invested capital
D. Both A and B
Several factors influence __________________, particularly:
1.
The proximity of the valuation date to the fiscal year-end
2.
The quality of the interim statements
3.
The importance of seasonality to the subject company
4.
The extent to which information in interim statements is likely to affect the affect the conclusion
A. Usefulness of interim statements
B. Financial schedules
C. Federal tax returns
D. Audited statements
It is important to point out that _______________of the business can have an impact on the valuation conclusions, especially when it comes to partnership and limited liability companies.
A. Interim statements
B. Financial Schedule
C. The importance of seasonality to the subject company
D. A different legal status
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