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NNN is a company financed by both equity and debt. The directors of NNN wish to calculate a valuation of the company's equity and at a recent board meeting discussed various methods of business valuation.
Which THREE of the following are appropriate methods for the directors of NNN to use in this instance?
Suggested Answer: A, B, E
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12 comments · newest first
TA
Tammara
12 months ago
Wait, can you really just use total earnings like that?
LA
Lavelle
12 months ago
E is solid too, cash flow to equity is key.
CA
Carisa
1 year ago
C seems off, why not account for debt?
NI
Nina
1 year ago
I think B is the way to go, it considers WACC!
IZ
Izetta
1 year ago
A is definitely a classic method for equity valuation.
AB
Abel
1 year ago
I’m uncertain about the difference between cash flow to all investors and cash flow to equity. I hope I can remember which one to choose in this context!
MO
Mozell
1 year ago
I practiced a similar question where we discussed cash flow to all investors discounted at WACC. I believe that one is definitely relevant here.
GL
Gladis
1 year ago
I think cash flow to equity discounted at the cost of equity is a valid method, but I’m a bit confused about how debt factors into the valuation.
AL
Alise
1 year ago
I remember that using total earnings and a price-earnings ratio is a common method, but I'm not sure if it's always appropriate for valuing equity directly.
IL
Ilda
1 year ago
Hmm, I'm a bit unsure about this one. I know slideshows are commonly used for mobile ads, but I'm not sure I can confidently identify the specific advantage they offer. I'll have to make an educated guess.
RA
Rasheeda
1 year ago
I think spend analysis should be the priority here. That's what we practiced in the case studies, right?
TA
Tamesha
1 year ago
Okay, let's think this through step-by-step. The question is asking about the difference in gearing ratios between LM and JK, and we have four potential explanations to choose from.