What is a primary characteristic of asset-based valuation?

The primary characteristic of asset-based valuation is that it considers the net worth of all assets and liabilities. This approach involves determining the value of a business or an individual's assets and liabilities to present a clear snapshot of their financial position.

Asset-based valuation is centered on the balance sheet perspective, where assets such as real estate, investments, and personal property are valued, and liabilities such as debts and obligations are subtracted to derive net worth. This method is particularly useful in divorce financial analysis as it provides a straightforward assessment of the tangible and intangible assets involved in divorce settlements.

In contrast, focusing on current cash flow pertains more to income-based valuations, which look at an individual's or business's ability to generate cash over time. Evaluating market trends and assessing historical performance are methodologies associated with market-based valuation and income approaches, respectively, but do not directly align with the essence of asset-based valuation, which strictly analyzes a snapshot of current assets and liabilities.