Market-Based Valuation Explained!

Welcome back to the Crux of Investing & Finance! This week's lecture touches on the second of three methods for valuing businesses. Market-based valuation utilizes comparisons of similar companies to attribute a value to the business at hand and does not utilize cashflows as income-based valuation requires. This makes it somewhat easier to utilize, given there are companies similar to the one we would like to value. This type of valuation is very useful in determining whether the purchase of a big-ticket item in your personal life is worth what the seller is quoting, so use it wisely! Until Tuesday...Jay