Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Overview of Business Valuation

Ganga Retail Ltd wishes to know whether a proposed expansion into a new state would add value for its shareholders, by comparing the present value of expected cash flows with the cost of the project. Which purpose of valuation is being served?

This serves strategic and investment decision-making. By comparing the present value of expected cash flows from the expansion with its cost, management can judge whether the project is likely to create value for shareholders.

  1. ASupporting strategic and investment decisions by assessing value creationCorrect
  2. BPreparing the report on corporate social responsibility
  3. CFixing the quorum for board meetings
  4. DComplying with the secretarial audit report format

Explanation

Comparing the present value of expected cash flows with cost is a valuation-based approach that tells management whether an investment creates value. The other options are unrelated governance or reporting matters.

Did you get it right without looking?

One question tells you little. A timed set on Overview of Business Valuation shows your real accuracy, how long you take and where you lose marks.

Practise Overview of Business ValuationFree diagnostic mock

More Overview of Business Valuation questions