Question

What are the main attractions and limitations of the comparator approach in valuation?

Answer 1

The main attractions of the comparator approach in valuation is the ability to compare prices of commodity and the limitation is lack of access to financial details of the company close by.

What is comparator approach in valuation?

The approach is used to compare sales of similar goods in a particular location.

The analysis is done for goods that are sold within a period of time that is not too far from each other

The main attractions of comparator approach in valuation?

• It is useful in comparing prices and monitoring trends of goods sold.
• It uses a company financial information and it can be used to understudy a competitor.

The main limitations of comparator approach in valuation?

• It requires financial information for other company which may not be easily accessible.

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