Before we explore their impact on business valuation, it's essential to understand what economic cycles are. Economic cycles, also known as business cycles, refer to the fluctuation in economic activity that an economy experiences over a period.
Business valuation is the process of determining the economic value of a company. This can be for various purposes, including sale value, establishing partner ownership, taxation, and more.
The cost of capital represents the weighted average of the costs of various capital sources, namely equity and debt.