Final answer:
The income approach to valuation can be applied to any company, whether it is currently making money or not, because it is based on the estimation of value through income, profits, and cash flow.
Step-by-step explanation:
The income approach can be applied regardless of whether a company is only making money or not. It is a valuation method used to estimate the value of a company based on its income. This method considers various forms of revenue, profit, and cash flow. The answer to the student's question is b) False.
The income approach is one of the three main methods used to appraise businesses, alongside the market approach and the cost approach. It can be particularly useful for valuing businesses that have stable and predictable cash flows and can be applied regardless of whether a company is profitable at the moment or not. It can also be used for valuing income-producing real estate or for economic analysis.