Ch 13 · Business Valuation — CA Final AFM
4 levels · 60 questions · free
How to play
Mixed questions from this chapter — fill the missing term, sort into the right box, match the pairs, order the steps, or catch the formula that is wrong.
What this drills
Every method here answers “what is this firm worth?” differently, and the marks come from knowing which one an examiner is pointing at — and which capital charge, book value or multiple belongs to it.
- ✓EVA and MVA
- ✓DCF and Shareholder Value Analysis
- ✓Relative valuation and the chop shop method
- ✓Enterprise value and going-concern vs liquidation
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CA Final books →Ch 13 · Business Valuation — questions
What is the difference between EVA and MVA?+
EVA is a DERIVED value added — NOPAT less the capital charge — measuring whether returns beat the cost of capital. MVA is the value added as PERCEIVED BY THE MARKET: the firm's current market value less the capital invested in it.
Why is DCF unsuitable for a distressed company?+
DCF assumes the firm continues as a going concern and that cash flows can be projected and discounted. A distressed firm may default, has illiquid assets and highly economy-sensitive revenues, so the going-concern premise the model rests on may not hold.