The Cost Approach to Valuing a Business
RogerRossmeisl
JANUARY 26, 2022
The cost (or asset-based) approach to valuing a business focuses on the balance sheet. This financial statement reports “book values” for the company’s assets and liabilities. Here’s how the cost approach works and when it might be an appropriate method of valuation. Book value vs. fair market value Amounts reported on a company’s balance sheet for its assets and liabilities may not reflect their fair market value to a potential buyer or seller.
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