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Chapter 10

2.3 Strengths and weaknesses of asset based valuation

Strengths Weaknesses

 The valuations are fairly readily  Future profitability expectations
available. are ignored.

 They provide a minimum value  Statement of financial position
of the entity. valuations depend on
accounting conventions, which
may lead to valuations that are
very different from market
valuations.

 It is difficult to allow for the value
of intangible assets such as
intellectual property rights.

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