Methods of Firm Valuation
The following firm valuation methods are discussed in our Firm Valuation homework writing help:
Asset Valuation Method: This method is performed in two ways; going concern method or liquidation basis method. For a business concern, a firm is valued at the net asset value less the amount of liabilities, which need to pay off. In a liquidation based approach, market valuation is done as net cash. Net cash is obtained by paying all liabilities and selling all aseets.
The present cost valuation method: This valuation method values a business on the basis of the current cost of assets when placed on the market. In this method, the number of liabilities and assets are measured using the present market value.
The historical cost valuation method: This cost valuation method values business at the original cost the assets were purchased. It measures the value of assets and liabilities through the value of the balance sheet.
Economic valuation method: This is one of the best methods used for business valuation. This method values a business by its ability to create wealth in the future.
Earning Multiplier: The earning multiplier is used to derive an accurate picture of the actual value of a company as the profits of a company are a reliable indicator of financial success rather than sales revenue. This method adjusts the future profits against the cash flows, which can be invested at the present interest rate in the same time period.
Discounted Cash Flow Method: This business valuation method is based on the future cash flow projections that are adjusted to receive the present market value of a company. One of the differences between the profit multiplier method and this method is that the Discounted Cash Flow considers inflation for calculating the current value.
Book Value: It is the shareholders’ equity value. The book is derived by deducting the liabilities from the total assets of a company.
Liquidation Value: Liquidation value is the net amount that business shall get if the assets were liquidated and its liabilities were paid off.