BCA Business Valuation Methods & Principles

Question 1

What is the primary purpose of business valuation?

Accepted Answer

To determine the economic worth of a business

Answer

To estimate tax liabilities

Answer

To increase stock prices artificially

Answer

To avoid legal compliance

Question 2

Which valuation method is based on projected future cash flows?

Accepted Answer

Discounted Cash Flow (DCF) method

Answer

Market capitalization approach

Answer

Book value method

Answer

Comparative market analysis

Question 3

What is the key advantage of using the market approach for business valuation?

Accepted Answer

It relies on actual market transactions

Answer

It ignores economic trends

Answer

It uses only financial statements

Answer

It is based on management opinions

Question 4

Why is goodwill an important factor in business valuation?

Accepted Answer

It reflects intangible assets like brand reputation

Answer

It has no impact on valuation

Answer

It only applies to tangible assets

Answer

It reduces the company’s overall value

Question 5

Which factor is most important when determining a business's valuation?

Accepted Answer

Revenue, profitability, and market conditions

Answer

Only the company's assets

Answer

Only competitor performance

Answer

Employee satisfaction alone

Question 6

What is the role of an appraiser in business valuation?

Accepted Answer

To provide an objective valuation of the business

Answer

To manipulate financial reports

Answer

To increase business value for marketing purposes

Answer

To set arbitrary prices for businesses