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Hello students, here is a question which of the following statement is false regarding the business valuation process.
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So, we have four options given here.
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We have to find out which is the false statement out of this.
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The first is operating cash flow, operating cash flow minus cash outlay to replace, to replace operating capacity, operating capacity represents free cash represents free cash flow.
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And the second point is credit valuation involves, credit valuation involves estimating the worth of, estimating the worth of a company, one of its, so one of its operating unit or its ownership shares, ownership shares.
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And the third statement is fundamental valuation, fundamental valuation uses basic accounting measures, basic accounting measures to assess the amount, to assess the amount, timing and uncertainty of a firm, future operating cash flow of a firm's future operating cash flow or earnings.
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And the fourth point is business valuation, business valuation involves estimating the intrinsic value of a company, value of a company or one of its operating unit, one of its operating unit.
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Let us discuss the answer for this.
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Operating cash flow minus cash outlay to repay an operating capacity represents a free cash flow.
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This statement is true.
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Free cash flow is the cash generated by a company operations after deducting a capital expenditure required to maintain or expand its assets base.
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So, when it comes to the second statement, credit valuation involves eliminating the worth of a company, one of its operating units or ownership share...