When selling a going concern, which valuation method is inappropriate?

When selling a going concern, net asset valuation is generally considered inappropriate because this method solely focuses on the value of the individual tangible and intangible assets without taking into account the business's operational activities and future earning potential. A going concern implies that the business is expected to continue its operations for the foreseeable future, generating profits, and having ongoing customer relations.

The other valuation methods are more aligned with this context. Market valuation can provide insights based on comparable sales, reflecting the business's value in the context of the current market. Projected income valuation considers the future earnings potential of the business, crucial for a buyer looking to acquire a company with ongoing revenue. Discounted cash flow valuation takes into account the future cash flows that the business is expected to generate, discounting them back to their present value, which is significant for understanding the worth of a going concern.

Thus, while net asset valuation provides a snapshot of the underlying assets, it fails to capture the dynamics of a business's ongoing operations and earning potential, making it an inappropriate choice in this context.