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1. Net Asset method of Business Valuation:
Please I want to know if under this method Goodwill or all Intangible Non-Current Assets should be ignored?
Reference: CBE Past paper, March/June 2019 sample questions, question 21.2. I also want to know the similarity and the difference between P/E method of Business Valuation and Earnings Yield method of Business Valuation.
1. It depends whether or not they have a sales value. If the company is being liquidated them internally generated goodwill will certainly not have a sales value.
2. They are the same. The PE ratio is MV/EPS, the earnings yield is EPS/MV as a %.
So both methods apply either the PE or the earnings yield to the earnings in order to get the market value.
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