Business Valuation Application Quiz!

17 Questions | Total Attempts: 75

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Business Valuation Application Quiz!

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Questions and Answers
  • 1. 
    Tangible and intangible assets are generally included in a business valuation.
    • A. 

      True

    • B. 

      False

  • 2. 
    Complete this sentence: The value of a business is calculated using cash flow, working capital, and assets, and subtracting                   _
  • 3. 
    Valuation firms generally charge an hourly rate rather than a contingent fee. What is the main reason for this?
    • A. 

      To encourage clients to provide information quickly

    • B. 

      To allow for flexible work arrangements

    • C. 

      So they can easily charge different rates at each step of the process

    • D. 

      A contingent fee would be a conflict of interest, so having the time to do more deals is vital

  • 4. 
    Business valuation is generally needed at which of the following times?
    • A. 

      During merger & acquisition

    • B. 

      During a restructure

    • C. 

      During the recruitment process

    • D. 

      During a tax dispute

    • E. 

      During strategic planning

  • 5. 
    Which of the following position types do we target when prospecting a Business valuation company?
    • A. 

      Business Brokers

    • B. 

      Head of Sales

    • C. 

      Business Valuations Partners

    • D. 

      M&A Partners

    • E. 

      Head of Research

  • 6. 
    Generally, IBISWorld reports saving Business Valuators how many hours per valuation?
    • A. 

      1-2 hours

    • B. 

      4-5 hours

    • C. 

      7-8 hours

    • D. 

      10-12 hours

  • 7. 
    To calculate the value of a company, an operator works out cash flow, working capital, and assets then subtract liabilities. Some 14 factors (depending on the model) are then assessed to work out the firm’s value. IBISWorld helps measure six of the 14 factors affecting business value.
    • A. 

      Industry growth

    • B. 

      Deal financing

    • C. 

      Competition

    • D. 

      Ease of operation

    • E. 

      Location

    • F. 

      Product/service concentration

    • G. 

      Market concentration

    • H. 

      Desirability

  • 8. 
    Which IBISWorld Industry Report section is particularly useful to Business Valuators in measuring the Competition factor (as one of the 14 typical valuations factors)?
    • A. 

      Major Players

    • B. 

      Key Statistics

    • C. 

      Products & Services

    • D. 

      Industry Outlook

  • 9. 
    How is iExpert most useful to Business Valuators undertaking general valuations/estate planning?
    • A. 

      The archive library allows valuators to retrospectively value firms

    • B. 

      IExpert summaries can be used by expert witnesses in court cases

    • C. 

      IExpert summaries can be copied into valuation documents to make industries easier to understand

    • D. 

      Valuators can use the executive summary to make abstract industry codes more understandable

  • 10. 
    What kind of services do Business Valuators generally perform when independent valuation is required because there is a close relationship between parties?
    • A. 

      Employee stock option plans

    • B. 

      Litigation services

    • C. 

      Estate planning

    • D. 

      Fairness opinions/regulation

  • 11. 
    Employee Stock Option Plans (ESOPs) are used to value the shares of departing owners of a company or to motivate employees. Why is it so important for Business Valuators to have access to up-to-date industry information when providing ESOP services?
    • A. 

      ESOPs are heavily regulated, so accurate valuations are needed to meet compliance standards

    • B. 

      ESOPs tend to happen many times a year

    • C. 

      Firms need independent, up-to-date data to support court testimony

  • 12. 
    IBISWorld is a partner or sponsor of which of the following Business Valuation-related organizations? 
    • A. 

      American Society of Appraisers

    • B. 

      National Association of Certified Valuation Analysts

    • C. 

      Alliance of Merger & Acquisition Advisors

    • D. 

      Institute of Business Appraisers

  • 13. 
    IBISWorld reports have limited application to Business Valuators in litigation services because Industry Reports cannot be used in court. 
    • A. 

      True

    • B. 

      False

  • 14. 
    Which of the following questions would be the least appropriate to ask a prospective Business Valuations client?
    • A. 

      When valuing a business, how do you go about researching the industry component?

    • B. 

      How do you value the historical value of a business on a specific date?

    • C. 

      How many valuations do you do per year?

    • D. 

      How do you shortlist potential clients that will pass the scrutiny of credit?

  • 15. 
    Which of the following IBISWorld Industry Report chapters is not a key section used by Business Valuators?
    • A. 

      Products & Services

    • B. 

      Technology & Systems

    • C. 

      Key Statistics

    • D. 

      Cost Structure Benchmarks

  • 16. 
    This question relates to the following testimonial from the McClean Group: "One of the most difficult parts of my job is finding reliable and timely data to support growth rates for forecasts used in business valuations. IBISWorld enables us to have a starting point in which to support forecast assumptions in a business valuation." After viewing the testimonial, which characteristics of IBISWorld Industry Reports appear to have been particularly valuable to the McClean Group?
    • A. 

      Diversity of the collection and clear analysis

    • B. 

      Reliable and frequently updated

    • C. 

      Niche focus and market segmentation

    • D. 

      Clear analysis and market segmentation

  • 17. 
    Watch the following video, then select the three possible approaches to Business Valuation that it describes.  
    • A. 

      Discounted cash flow approach

    • B. 

      Ratio-based approach

    • C. 

      Revenue-based approach

    • D. 

      Asset-based approach

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