What are the different approaches to valuation?

Question

Accepted Answer

Different approaches to valuation include market approach, income approach, and asset-based approach.

Market approach: Compares the subject company to similar companies that have been sold recently.
Income approach: Estimates the value of a business based on its expected future income.
Asset-based approach: Calculates the value of a business based on its assets and liabilities.
Cost approach: Determines the value of a business by calculating the cost to replace its assets.
Discounted cash flow (DCF) method: Estimates the value of a business by discounting its projected cash flows to present value.
Comparable company analysis (CCA): Compares the subject company to publicly traded companies in the same industry.

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