Company Valuation or Business Valuation: Reporter: Rodulfo Macalam
Company Valuation or Business Valuation: Reporter: Rodulfo Macalam
Company Valuation or Business Valuation: Reporter: Rodulfo Macalam
or BUSINESS VALUATION
Reporter: Rodulfo Macalam
What is Company Valuation
1. Market Capitalization
▪ Market capitalization is the simplest method of business
valuation. It is calculated by multiplying the company’s
share price by its total number of shares outstanding.
3. Earnings Multiplier
▪ Instead of the times revenue method, the earnings
multiplier may be used to get a more accurate picture of
the real value of a company, since a company’s profits are a
more reliable indicator of its financial success than sales
revenue is. The earnings multiplier adjusts future profits
against cash flow that could be invested at the current
interest rate over the same period of time. In other words,
it adjusts the current P/E ratio to account for current
interest rates.
Methods of Valuation
5. Book Value
▪ This is the value of shareholders’ equity of a business as
shown on the balance sheet statement. The book value is
derived by subtracting the total liabilities of a company
from its total assets.
Methods of Valuation: Book Value
6. Liquidation Value
▪ This is the net cash that a business will receive if its assets
were liquidated and liabilities were paid off today.
▪ Liquidation value is the total worth of a company's
physical assets if it were to go out of business and the
assets sold. The liquidation value is the value of company
real estate, fixtures, equipment, and inventory.
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