Series 79 practice questionmediumValuation Methods
A banker is selecting comparable companies. Which factor is most important to keep constant besides industry, size, and growth?
- AHeadquarters city
- BFiscal year-end month
- CThe amount of press coverage
- DBusiness model and margin profile✓ Correct answer
Explanation
Why D — Business model and margin profile
Business model and margin profile Comparable analysis works best when peers share similar economics, customer bases, and profitability drivers. A company with a very different business model can trade at a very different multiple even inside the same broad industry.
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