Finance Formulas / July 11, 2018 / Alyvia French
Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Valuation is used by financial market participants to determine the price they are willing to pay or receive to effect a sale of a business. In addition to estimating the selling price of a business, the same valuation tools are often used by business appraisers to resolve disputes related to estate and gift taxation, divorce litigation, allocate business purchase price among business assets, establish a formula for estimating the value of partners' ownership interest for buy-sell agreements, and many other business and legal purposes such as in shareholders deadlock, divorce litigation and estate contest. In some cases, the court would appoint a forensic accountant as the joint expert doing the business valuation.
When the cross elasticity of demand for product A relative to a change in the price of product B is positive, it means that in response to an increase in the price of product B, the quantity demanded of product A has increased. An increase in the price of product B means that more people will consume A instead of B, and this will increase the quantity demanded of product A.
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