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TECHNIQUES OF BUSINESS VALUATION LET'S DO SOMETHING ABOUT BUSINESSS
MARKET-BASED APPROACH
ASSET-BASED APPROACH This is a kind of judgment in business that concentrates on the value of a company’s assets or the reasonable market value of its entire assets after subtracting liabilities. This is used to determine the bottom end price for
This technique is used to find the value of a business by matching it to other related businesses that have sold recently. This helps to examine the prices of other similar businesses
an operating or "going concerned"
to
determine
an
approximate
business. However, it is the preferred
valuation for your business.
approach for operating businesses.
BUSINESS VALUATION TECHNIQUES There are four primary business valuation techniques: Market-Based Valuation. Earnings Based Valuation. Asset-Based approach. Cash-Flow Based Valuation. Each approach includes a complete summary and calculations.
EARNINGS-BASED APPROACH
CASH-FLOW BASED APPROACH
This term is related to the Market
This is similar in some aspects to the
valuation, based on the assumption
earnings-based
that the company value should be
business estimates on the future cash
related to companies whose shares
coming from the business. That cash flow
are exchanged in the stock market.
is reduced to a net present value at a
This is used to determine normalized
specific discount rate to examine the
earnings, you calculate a weighted
value of the business. This way is the least
average of earnings over a specific
used
period.
examining cash available for debt service
valuation
judgment.
technique
This
marks
useful
for
after an investment.
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