Final answer:
The three main approaches to firm valuation are the market approach, the income approach, and the asset-based approach.
Step-by-step explanation:
The three main approaches to firm valuation are the market approach, the income approach, and the asset-based approach. In the market approach, the value of a firm is determined by comparing it to similar firms in the market that have been sold. This approach looks at factors such as the price-to-earnings ratio and the price-to-sales ratio of comparable firms. In the income approach, the value of a firm is determined by estimating the future cash flows it is expected to generate. This approach uses methods like discounted cash flow analysis to calculate the present value of these cash flows. In the asset-based approach, the value of a firm is determined by the value of its underlying assets. This approach looks at factors such as the firm's net book value and its net tangible assets.