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METHODS OF VALUATION

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					Valuation Methods

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Assets Accumulation method. Market valuation. Discounted cash flow method. Price earning multiples valuation. Replacement cost and Realisable value method.

Assets Accumulation method.
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All the assets of the company are realised at the market value and outsiders liabilities are deducted from the realised amount. Net proceeds accrue to the shareholders.

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Market valuation.
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Market value is determined by multiplying the share quoted price of the company with the number of issued shares.

Discounted cash flow method.
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One of the important valuation methods and a strong tool because it measures the cash generation potential of the business. Future cash flows of the company are discounted with the weighted average cost of capital used in the business.

Price earning multiples valuation.
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This is also one of the most widely used tool to value a business. Initially price earning ratio is found and then this price earning multiple is multiplied with the net income to determine the cost of business.

Replacement cost and Realizable value method.
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Replacement cost method is used when a business is to completely replaced by another business. Realisable value method is used at the time of winding up of the business. Also called as Liquidation method.


				
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Description: VALUATION RELATED DOCS
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