NACVA Certified Valuation Analysts Exam Practice Test

Buy-sell agreement may specify that the shares be valued strictly at their fair market value as:

The analyst should keep in mind that (1) if earning are adjusted from LIFO to FIFO and (2) if after-tax income or after-tax cash flow are used as the appropriate measure of economic income, then the adjustment should be net of:

Financial risk is measured in the following ways EXCEPT:

The work-in-process inventory of a professional service firm is essentially the unbilled receivables of the firm. Therefore, the same net realizable value rules discussed with respect to accounts and notes receivable would apply to this asset as well. With regard to tangible merchandise inventory, there are some common valuation methods such as:

Most analysts agree that one of the most important factors in the estimation of the direct capitalization rate for the excess earnings is the perceived persistence of the excess earnings. The longer the time period and the greater the uncertainty of the expectation of excess earnings, the __________the direct capitalization rate.

In setting the interest rate in Buy-Sell agreement, we face the problem that market interest rates fluctuate considerably over time, and we have no way of knowing at what time in the future the Buy-Sell transaction will be triggered nor what the market level of interest rates will be at that time. There are several possible approaches to dealing with this dilemm a. One approach is

The same general processes and decision criteria apply to both (1) deciding on whether or not to rely on any particular valuation multiple at all and (2) deciding on the relative weight to be accorded each valuation multiple ultimately used in reaching the opinion of value. A study of the transactional data may lead to greater of lesser reliance on certain valuation multiples than one might have expected prior to compiling the dat a. All of the following are considered in impact of guideline transactional data evaluation EXCEPT: