Question

Because of data limitations (e.g. audited statements, actuarial assumptions, etc.) valuation of private firms often requires more subjective adjustments than for than those of public firms. True or False

Answer 1

For a public company, publishing the audited financial statements in public is mandatory and the audited financial statements help in understanding the different assumptions and audited statements which helps in valuing the firm.

On the other hand in case of private companies, there is no requirement of audited financial statement to be published in public. Due to unavailability of these data, it becomes difficult to make accurate assumptions while valuing the company and hence subjective adjustment is required to value the private company.

Thus the statement is TRUE.