Which approach to valuation focuses primarily on revenue generation?

The income approach is centered around the concept of revenue generation because it estimates the value of an asset based on the income it is expected to produce in the future. This method involves capitalizing the expected future cash flows that an asset can generate, which directly ties to its ability to generate revenue.

The primary focus here is on the anticipated cash inflows, often calculated as net operating income, which reflects the economic benefits the asset will provide over time. This approach is particularly useful for valuing income-producing assets such as commercial real estate, businesses, or investments where the primary value comes from their earning capacity.

In contrast, the cost approach values an asset based on the cost to replace it, minus depreciation. The market approach determines value based on comparable transactions in the marketplace, which can be less focused on a specific asset's revenue. The comparative approach also primarily looks at similarities to other assets and their prices instead of emphasizing revenue generation directly.