The employer wants to see analytical judgment and whether you can weigh strengths and weaknesses rather than just choosing a method randomly.
Pick one method, explain what it reveals about the business, admit when you would use the other, and frame it as situational.
Start by stating your preference clearly, then justify it through the lens of what the method actually tells you about the business. Say that you lean toward DCF because it forces you to build a view of the company's cash flows, growth, and margins from the ground up, which is the only way to test whether the story behind the numbers is credible. Then admit its weakness without being asked: the output is only as good as your assumptions, and a small change in terminal growth or discount rate can swing the value wildly. Explain that this is exactly why you would not use it in isolation. Say that you bring in comparable company analysis as a market sanity check, especially in a Philippine context where public comparables might be thin, so you often triangulate with regional peers or recent M&A transactions. Frame your choice as situational, for example, for a mature, cash-generative business with stable margins, DCF gives you the clearest picture, but for a fast-growing startup with no positive cash flow, you would lean on comps and precedent transactions. Close by saying that your real preference is for the method that best matches the company's stage and the quality of data available, and that you would always stress-test one against the other before giving a final number.
Avoid saying 'Mas safe po yung DCF kasi exact po siya' alone. Instead, say 'I prefer DCF because it reveals the business drivers, but I use comps for a market sanity check.'
Situation
In a classroom debate for my Investment Management course, I had to defend a preferred valuation method while acknowledging the other approach.
Task
I needed to articulate a clear position and show that I understood the trade-offs, not just repeat textbook definitions.
Action
I argued that I prefer DCF because it forces me to think through the company's drivers and long-term assumptions, which builds a deeper understanding of the business. I acknowledged that comparable company analysis is faster and more market-driven, but said I would use it as a cross-check. To support my position, I described how a DCF on a retail company made the cost and revenue drivers visible. I also noted that the choice depends on the purpose and data available.
Result
The professor praised the balanced reasoning, and a classmate asked me to proofread his own DCF term paper. I learned that a preference is stronger when it is justified rather than absolute.
State a preference, justify it with practical reasoning, and acknowledge the alternative.
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