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

Sundaram Textiles Ltd is being valued by an adviser who assumes the mill will keep operating indefinitely with its present workforce, machinery and customers, and no plan exists to sell its assets piecemeal. Which premise of value is the adviser applying?

The adviser is applying the going concern premise. The business is assumed to continue operating indefinitely with its existing assets, workforce and customers, and no break-up sale is planned. Liquidation-based premises would apply only if the assets were to be sold off.

  1. AGoing concern premiseCorrect
  2. BLiquidation premise
  3. COrderly disposal premise
  4. DForced sale premise

Explanation

The going concern premise values a business on the assumption that it continues operating for the foreseeable future. Liquidation, orderly disposal and forced sale premises assume the business or assets will be sold off, which is contrary to the facts here.

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