The CPA Journal

The CPA Journal: "n the past, business valuation has generated a number of skeptics because of its basis in prognostications about the future. Historically, business valuation focused on tax matters, litigation among owners of small businesses, and bankruptcy. Financial accounting, on the other hand, has traditionally been based on historical data. The importance of business valuation in the information age resides in its use of the present value of estimated future cash flows in order to arrive at a meaningful valuation. The demand for real-time financial data renders what happened last year irrelevant when compared to what will be happening next year. Investment decisions based solely on the past will not stand up. Historical data is frequently inadequate to predict the future."

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