Hi,
I was doing the CFAI questions, and apparently the income approach is best for a high-growth private company?
I can’t understand how this can be the case given that the company will have very little cash flow (I assume most of it will be ploughed back into the company’s projects). Therefore any estimate based on cash flows is likely to be inaccurate. I would have thought the asset based valuation would be better?
Can someone shed some light?
Thanks,