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6. Asset-Based Valuation

j. describe asset-based valuation models and their use in estimating equity value;

## k. explain advantages and disadvantages of each category of valuation model.

What is the theory underlying the asset-based valuation approach? The value of a business is equal to the sum of the value of the business’s assets. The approach estimates the intrinsic value of a common share from the estimated value of assets of a corporation minus the estimated value of its liabilities and preferred shares.