If the market leader in an industry has a $300 million market value and a 30% market share, the market is valuing each percentage point of market share at $10 million. If a target company in the same industry has a 20% market share, the market value of the target company is $200 million.
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The comparable recent transactions method is usually considered less reliable than the comparable companies' valuation method.
The comparable companies' valuation method uses the discounted value of a firm's free cash flow.
Common size financial statements are among the most commonly used tools to uncover data irregularities.
In normalizing historical data, monthly revenue may be aggregated into quarterly or even annual data to minimize possible distortions in earnings or cash flow due to inappropriate accounting practices.