For a firm with negative current book value: No valuation method can be used, it
ID: 2743230 • Letter: F
Question
For a firm with negative current book value:
No valuation method can be used, it is a failing company.
Dividends based valuation method cannot be used.
Residual income based valuation method is not appropriate.
Free cash flows based methods produce a negative price estimate.
No valuation method can be used, it is a failing company.
Dividends based valuation method cannot be used.
Residual income based valuation method is not appropriate.
Free cash flows based methods produce a negative price estimate.
Explanation / Answer
Correct answer: Free cash flows based methods produce a negative price estimate