When preparing a business valuation for reorganization proceedings under bankruptcy statues, the parties will frequently rely on___________.
A. Reengineering of valuation procedures
B. Capitalization of anticipated cash flow
C. Ownership of assets
D. Enterprise value
In many instances, value considerations are tempered by internal variables, often variables relative to specific shareholding as opposed to the company as a whole. Which of the following is NOT out of such variables?
A. Size of the subject interest (reflecting not only magnitude but control issues)
B. The right to vote and to impact the direction of the business
C. Restrictive provisions affecting ownership rights
D. Legal proceedings related to ownership or management prerequisites.
The use of asset-based approach should not be confused with the selection of the appropriate premise of value for the subject business valuation. Some analysts mistakenly confuse the use of asset-based approach with a liquidation premise of value (or with a liquidation valuation). Rather, the asset-based approach can be used with all premises of value including:
A. Value in use as a going-concern
B. Value as orderly disposition
C. Value as in exchange as part of a forced orderly liquidation
D. A, B and C
Below is a partial listing of possible scenarios in_________________.
-100 % control
-More than a majority or supermajority, but less than 100%
-More than 50% but less than a supermajority, where state statutes or articles of incorporation require a
supermajority
-50 %
-Less than 50 % but "effective control"
-Minority shares that control by voting block
A. Control spectrum
B. Control or lack of control spectrum
C. Discount for lack of control or minority discounts
D. B and C both are the same
Qualitative factors might also cause the required yield to be higher or lower than that based solely on the quantitative ratio analysis. Whish of the following is NOT out of such quantitative factors?
A. The competitive environment in the industry
B. Depth and competence of management
C. Trends in diversification of revenue sources
D. Trends in diversification of strategies
The most prevalent measure for assessing the likelihood of receiving future preferred dividends is the company's_________________, commonly defined as the sum of pretax income plus interest expense divided by the sum of interest expense plus preferred dividends adjusted for tax.
A. Variable-charge coverage ratio
B. Fixed-charge coverage ratio
C. fixed-charge leverage ratio
D. fixed-charge liquidity ratio
Bishop and Schroeder make the point that lack of marketability discounts should be recognized, just as they are in Tax Court, because one spouse usually gets liquid assets while the other spouse lacks:
A. the mode of payment as it is the exchange of interests in the marital assets
B. Underlying principles that are much more consistent and broadly accepted
C. Such flexibility
D. The flexibility and safety of being able to "cash out" readily at the owner's option
The discount rate is a market-driven rate. It represents the expected yield rate-or rate of return-necessary to induce:
A. Investors to commit available funds to the subject investment, given its level of risk
B. Yield rate
C. Dividends
D. Investment yield
There is no set of number guideline companies to use. However, the more data there are about each company and the greater the similarity between the subject company and the companies chosen as guideline companies, the ______ guideline companies will pass muster.
A. Greater
B. Fewer
C. Average
D. Depends on selection procedures and industry type
____________ indicates that the collective going-on concern value of the total subject entity is less than the sum of the individual values of the entity's total tangible assets.
A. Goodwill
B. Positive goodwill
C. Negative goodwill
D. Trademarks
