Group 8

ASSET-BASED VALUATION QUESTIONNAIRE

1. If an entity is not a going concern, the valuation must be based on the

entity's underlying assets. It would not be appropriate to use an income-based
valuation.
a.Liquidation Approach
b.Going Concern Approach

2.Net Book Value is equal to

a.Total asset – Total Liabilities
b.Asset – Liability

3.Asset Based Approach is commonly used when

a.Low value Companies
b.Businesses that generate losses

4.“An asset is a resource controlled by the ____ as a result of past events and
from which future economic benefits are expected to flow to the enterprise.”
a.Firm
b.Enterprise

5.Asset-based valuation provides a way of determining an indication of value of a

business based on the ______.
a.value of the Liabilities net of Assets
b.value of the assets net of liabilities
Asset-based Valuation Approaches & Methods

1. Which of the following is not a correct statement regarding the asset-based

approach?

A) The adjusted book value method and the asset accumulation method
are 2 primary methods

B) The adjusted book value method assumes a realization of the appraised

value of the company's assets as part of a going concern

C) If a partial interest is to be valued, the ability of that interest to cause the

sale of the company's assets is not relevant

D) The adjusted book value method is best suited to a company that has
no significant intangible assets

2. In which circumstance is valuing a minority interest using an asset-based

approach appropriate?

A) An asset-based approach for a minority interest is always appropriate

B) An asset-based approach should never be used to value a minority

interest

C) The controlling shareholder plans to liquidate the company

D) The controlling shareholder has no plans to liquidate the company

3. ____________ is an approach is primarily for the firms that do not intend

to sell or liquidate their business

Going Concern

4. ___________ the business will usually get a depressed value.

 Liquidation Value

5. On December 31, 20X1,Sunoo stock traded for a low of $33.51 and a high
of $34.02. The value of this asset used in the adjusted book value method
would be:

A. 33,756

B. 45,631

C. 23,890

D. 33,765

Business Value vs. Selling Price

Statement 1: Exit strategy is a long time preparation, you must start planning
three years only before your exit day.

Statement 2: The selling price is not 100% cash, it could be ear-outs, comprise of
shares, or others that could be used to bridge the value gap.

a. Statement 1 is false, and statement 2 is true

b. Both statements are false
c. Statement 2 is false, and statement 1 is true
d. Both statements are true

The exit strategy is a long time preparation, you must start planning three years only before your exit day.

- three to five years

Statement 1:Market Value is what the investors would receive if they sold all the
firm’s properties or assets and settled its debts and liabilities.
Statement 2: You should always choose the valuation method that gives you the
highest SP.

a. Statement 1 is false, and statement 2 is true

b. Both statements are false
c. Statement 2 is false, and statement 1 is true
d. Both statements are true

The longer the business remains unsold on the market, the higher your chances
of a sale.
True
False

How do we estimate the SP of our business?

a. SP= CP+ Profit
b. Company’s EBITDA × 4
c. SP= CP - Loss
d. Company’s EBITDA × 2

On Dec. 20x1 Crisanta bought yarns for ₱560, and she crochet tops and stuffed
toys. She sold them for a profit of 18%. At what price did Crisanta sell all the
items she made?
a. 100.8
b. 459.2
c. 566.6
d. 660.8

Solution:
Cost price of yarns = ₱560
Profit made = 18%

Selling price = (100+18)/100 × 560

= 118% × 560

= 1.18(560)

= ₱660.8