Section 1 - Instruction

You've learned how to weigh different valuation methods and how to perform quality control checks. These final steps are what separate a good valuation from a great one. Let's practice these crucial finishing touches.

Engagement Message

What's the first "sanity check" you should always perform on a final value?

Section 2 - Practice

Type

Fill In The Blanks

Markdown With Blanks

An analyst values a software company. The Income Approach is strong, so it gets [[blank:60%]] weight. The Market Approach has decent comparables, getting [[blank:30%]] weight. The Asset Approach is irrelevant for a software firm, so it gets [[blank:10%]] weight. This process is called valuation [[blank:reconciliation]].

Suggested Answers

  • 60%
  • 30%
  • 10%
  • reconciliation
  • synthesis
Section 3 - Practice

Type

Swipe Left or Right

Practice Question

Is the following finding a "Red Flag" that needs investigation, or a "Reasonable Finding"? Swipe to classify each one.

Labels

  • Left Label: Red Flag
  • Right Label: Reasonable Finding

Left Label Items

  • A company's projected growth rate is 50% per year, forever.
  • The valuation implies a revenue multiple of 50x for a grocery store.
  • The discount rate used is lower than the current risk-free rate.

Right Label Items

  • The final value is within 10% of recent comparable sales.
  • The implied EBITDA multiple is in line with industry averages.
  • The discount rate includes a premium for company-specific risks.
Section 4 - Practice

Type

Multiple Choice

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