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Business Valuation: Business Valuation / How much is my Business Worth?Adjusted Book Value Method definition Adjusted Book Value Method definition, It is the equity of a company which is arrived at after the values of assets and liabilities are adjusted.It represents the estimated market value . - Business Valuation terms / how much is my business worth Adjusted Net Asset Method definition Adjusted Net Asset Method definition, It is the method wherein of net asset value is calculated after deducting the net deferred taxes. - Business Valuation terms / how much is my business worth Appraisal definition Appraisal definition, A way of judging the performance of a business as compared to others in the same line.Financial studies are conducted whereby comparative benchmarking is done for this purpose.Through these industry insights, the value of a business can also be assessed. - Business Valuation terms / how much is my business worth Arbitrage Pricing Theory definition Arbitrage Pricing Theory definition, It is an asset pricing model .This model specifies that the returns earned are a function of multiple factors rather than one single factor. - Business Valuation terms / how much is my business worth Asset Accumulation definition "Asset Accumulation definition, Asset accumulation states that it is possible to liquidate the property, plant and equipment (PP&E) assets of a company, and after paying off the company's liabilities the net proceeds would accrue to the equity of the company. Valuation of assets based o Asset Based Approach definition Asset Based Approach definition, It is a valuation process for businesses where the primary source of income is the assets it owns.The assets and liabilities are measured at current market value and intangible assets are added. - Business Valuation terms / how much is my business worth Beta definition Beta definition, An indicator which reflects the risk a stock is exposed to relative to the market.Beta and investment risk are directly proportional to each other. - Business Valuation terms / how much is my business worth Blockage Discount definition Blockage Discount definition, The current value of the earnings from the liquidation of the block of shares is less than the amount which could have been realized at the current prices.It leads to a shorfall termed as the blockage discount. - Business Valuation terms / how much is my business worth Book Value definition Book Value definition, Also known as Net Worth. It is the value of the total assets less the total liabilities. - Business Valuation terms / how much is my business worth Business Enterprise definition Business Enterprise definition, An economic activity of providing goods and services undertaken by a service, commercial , industrial etc. entity. - Business Valuation terms / how much is my business worth Business Risk definition Business Risk definition, Uncertainity attached with the operations of an entity wherein the realization of future expected returns is unpredictable. - Business Valuation terms / how much is my business worth Business Valuation definition Business Valuation definition, It is an estimation of the market value of a firm or an entity. It differs from appraisal in the sense that appraisals only takes into consideraton the tangible assets, but a valuation considers intangible assets as well. - Business Valuation terms / how much is my business worth Corporate - Business Valuation Services definition "Corporate - Business Valuation Services definition, Valuators of businesses and intangible assets provide expert analysis of valuation issues for litigation, tax planning, and business transactions. Corporate valuation services provide scientifically supported valuations command respect from the other part Capital Asset Pricing Model definition "Capital Asset Pricing Model definition, (CAPM) It is a model according to which, the expected return of an asset is equal to the riskless return plus the assets non-diversiable risk ("beta") times the market-wide risk premium (excess expected return of the market portfolio over the riskless ret Capitalization definition Capitalization definition, The value of the economic benefits earned by an entity during a financial year. - Business Valuation terms / how much is my business worth Capitalization Factor definition Capitalization Factor definition, The expected rate of return that an investor anticipates to get.It also measures the risk that the expected earnings will not be achieved. - Business Valuation terms / how much is my business worth Capitalization of Earnings Method definition Capitalization of Earnings Method definition, This method considers the past earnings as a criteria for deciding the value of a business.This method does not value the inventory and work in progress. - Business Valuation terms / how much is my business worth Capitalization Rate definition Capitalization Rate definition, The Capitalization Rate or Cap Rate is a ratio of net operating income divided by the sales price.It defines the estimated value of income producing properties. - Business Valuation terms / how much is my business worth Capital Structure definition Capital Structure definition, The combination of an entity's debts and equity which constitutes the firm is termed as capital structure. - Business Valuation terms / how much is my business worth Cash Flow definition Cash Flow definition, Cash flow represents the inflow and outflow of the entity's money.It helps in determining the solvency capacity of the firm. - Business Valuation terms / how much is my business worth Common Size Statements definition Common Size Statements definition, A financial statement which shows every item as a percentage of the total or a common base figure. This statement gauges the relative changes in the items. - Business Valuation terms / how much is my business worth Control definition Control definition, The authority to order and manage the workings and management of an entity. - Business Valuation terms / how much is my business worth Control Premium definition Control Premium definition, The additional price paid by a controller in comparison to a non- controller, to exert the powers to manage the firm. - Business Valuation terms / how much is my business worth Cost Approach definition Cost Approach definition, A method of assessing the value of an asset by emphasizing the cost of replacement or reinstatement of it. - Business Valuation terms / how much is my business worth Cost of Capital definition Cost of Capital definition, The opportunity cost or the rate of return that a firm would have been able to earn had it invested in some other avenue at the same risk level. - Business Valuation terms / how much is my business worth Debt Free definition Debt Free definition, A situation created in the absence of any liabilities. - Business Valuation terms / how much is my business worth Discounted Cash Flow Method definition "Discounted Cash Flow Method definition, Evaluation of present value of future cash flows based on a discount rate. This valuation method uses the future free cash flow of the company (meeting all the liabilities) discounted by the firm's weighted average cost of capital (the average cost of all Discounted Future Earnings Method definition Discounted Future Earnings Method definition, Evaluation of present value of future financial benefits based on a discount rate. - Business Valuation terms / how much is my business worth Discount for Lack of Control definition Discount for Lack of Control definition, A stage wherein there is no 'control premium'.A discount is provided in the absence of any or some controllers. - Business Valuation terms / how much is my business worth Discount for Lack of Marketability definition Discount for Lack of Marketability definition, A discount applied in the valuation of an asset.The owner in such cases faces problems in selling that asset as it is not able to market it because of some market or asset characteristics. - Business Valuation terms / how much is my business worth Discount for Lack of Voting Rights definition Discount for Lack of Voting Rights definition, A discount applicable on the share value of minority interest voting share due o the lack of voting rights. - Business Valuation terms / how much is my business worth Discount Rate definition Discount Rate definition, The interest rate at which the expected future cash flows can be discounted. - Business Valuation terms / how much is my business worth Economic Benefits definition Economic Benefits definition, The earnings that a firm earns from the activities undertaken by it. It can be in the form of cash inflows, interest on investments etc. - Business Valuation terms / how much is my business worth Economic Life definition Economic Life definition, The time span in whicha firm's assets continue to produce economic benefits. - Business Valuation terms / how much is my business worth Equity definition Equity definition, The interest of the owner in the firm in the form of stocks or shares. It is also called shareholder's equity. - Business Valuation terms / how much is my business worth Equity Net Cash Flows definition Equity Net Cash Flows definition, The dividends paid to the shareholders after making the other necessary funding adjustments. - Business Valuation terms / how much is my business worth Equity Risk Premium definition Equity Risk Premium definition, The extra return that a stock or an instrument must account for over the normal rate to balance the market risks. - Business Valuation terms / how much is my business worth Excess Earnings definition Excess Earnings definition, The earnings over and above the expected rate of returns. - Business Valuation terms / how much is my business worth Excess Earnings Method definition Excess Earnings Method definition, A method under which after determining the excess eranings, these earnings are capitalized to find the value of intangible assets. - Business Valuation terms / how much is my business worth Fair Market Value definition "Fair Market Value definition, The expected or likely price at which a seller will be willing to sell the asset and also the buyer is willing to purchase the asset is termed as fair market value.The basic assumptions underlying are: both are rational, operating in an open and unrestric Fairness Opinion definition "Fairness Opinion definition, A report or opinion which is developed to assess whether the transaction ocuring is fair and correct from the financial aspect.It is especially meant for those who are not directly involved in the minute processes of the transactions but are greatly affec Financial Risk definition Financial Risk definition, Same as 'business risk'. Differs only in the sense that it is concerned only with the financial uncertainities. - Business Valuation terms / how much is my business worth Forced Liquidation Value definition Forced Liquidation Value definition, The value realized by forcefull liquidation or an immediate sell off, like an auction. - Business Valuation terms / how much is my business worth Free Cash Flow definition Free Cash Flow definition, The cash left with a firm after it has met its expenses.It is the excess left after the funding activities are completed. - Business Valuation terms / how much is my business worth Going Concern definition Going Concern definition, A concept which assumes that a firm will continue to be in existence indefinitely and continue its business operations. - Business Valuation terms / how much is my business worth Going Concern Value definition Going Concern Value definition, The value of a firm that will remain in existence in the future.It takes into account the value of the intangible assets like goodwill. - Business Valuation terms / how much is my business worth Goodwill definition Goodwill definition, An intangible asset which appears on the balance sheet as well. It is the value attached to a name,reputation, loyalty etc. - Business Valuation terms / how much is my business worth Goodwill Value definition Goodwill Value definition, The value attached to the goodwill that a firm is able to derive from its business. - Business Valuation terms / how much is my business worth Income Approach definition Income Approach definition, Income based approach - A method of evaluating an entity and its assets- both tangible and intangible.The most suitable approach is adopted wherein the value is based on the income generated. - Business Valuation terms / how much is my business worth Intangible Assets definition Intangible Assets definition, Assets which do not have any physical presence.Examples are: name, trademark, or patent. - Business Valuation terms / how much is my business worth Internal Rate of Return definition Internal Rate of Return definition, The rate of return on an asset which is also the discount rate that makes the present value of future cash inflows equal the current market price of the investment or the outflow. - Business Valuation terms / how much is my business worth Intrinsic Value definition Intrinsic Value definition, The difference of the value perceived of an asset from the actual market value. It is the inherent value. - Business Valuation terms / how much is my business worth Invested Capital definition Invested Capital definition, The collective of a firm’s equity and debt. - Business Valuation terms / how much is my business worth Invested Capital Net Cash Flows definition Invested Capital Net Cash Flows definition, The dividends (paid to shareholders) and interest (paid to investors and creditors) comprise the invested capital net cash flows. - Business Valuation terms / how much is my business worth Investment Risk definition Investment Risk definition, The uncertainities attached while making an investment that the investment may not yield the expected returns. - Business Valuation terms / how much is my business worth Investment Value definition Investment Value definition, Investment value is the value an investor estimates of a security. It is the amount according to him at which the security should be trading for.This is the price at which a convertible would trade according to an investor if it were nonconvertible. - Business Valuation terms / how much is my business worth Key Person Discount definition Key Person Discount definition, Key person discount is the reduction in value resulting from the actual or potential loss of a key person in a business enterprise. This is reflected by deducting an amount or percentage from the value of an ownership interest. - Business Valuation terms / how much is my business worth Levered Beta definition Levered Beta definition, Levered beta is the beta that reflects a capital structure that does include debt. - Business Valuation terms / how much is my business worth Limited Appraisal definition Limited Appraisal definition, Limited appraisal is an appraisal done with limitations in analyses, procedures, or scope. It is the process of determining the value of a business, business ownership interest, security, or intangible asset with the limitations. - Business Valuation terms / how much is my business worth Liquidation Value definition Liquidation Value definition, Liquidation Value is the net amount that will be realized if the business is terminated and the assets are sold and the liabilities are satisfied. - Business Valuation terms / how much is my business worth Liquidity definition Liquidity definition, Liquidity is the capability of an asset to be readily converted into cash. The easier it is to convert an asset the greater is its liquidity. - Business Valuation terms / how much is my business worth Majority Control definition Majority Control definition, Majority control is the degree of control which one has due to a majority position. - Business Valuation terms / how much is my business worth Majority Interest definition Majority Interest definition, One enjoys majority interest if the ownership interest is greater than fifty percent (50%) of the voting interest in a business enterprise. - Business Valuation terms / how much is my business worth Marketability definition Marketability definition, Marketability of a security is the ease or difficulty with which it can be resold in the secondary market. Good marketability means security can be resold easily in the secondary market. - Business Valuation terms / how much is my business worth Marketability Discount definition Marketability Discount definition, Marketability discount is an amount or percentage that is deducted from the value of an ownership interest. This is to compensate for the relative absence of marketability. - Business Valuation terms / how much is my business worth Market Approach definition Market Approach definition, Market based approach or market-based approach is a method of determining the value of a business, security, or an intangible asset.This is done by either comparing to similar businesses, securities or intangible assets that have been sold. - Business Valuation terms / how much is my business worth Market Capitalization of Equity definition Market Capitalization of Equity definition, Market capitalization of equity is the share price of a publicly traded stock being multiplied by the number of shares outstanding. This amount is known as the market capitalization of Equity. - Business Valuation terms / how much is my business worth Market Capitalization of Invested Capital definition Market Capitalization of Invested Capital definition, Market capitalization of invested capital is the market capitalization of equity and the market value of the debt component of invested capital added together. - Business Valuation terms / how much is my business worth Market Multiple definition Market Multiple definition, Market multiple is the market value of a company's stock or the invested capital divided by any of the measures adopted by the company such as economic benefits or the number of customers. - Business Valuation terms / how much is my business worth Market Value definition "Market Value definition, Market value works for public companies. The market value is determined by multiplying the quoted share price of the company by the number of issued shares. This valuation reflects the price that the market at a point in time is prepared to pay for the sh Merger and Acquisition Method definition Merger and Acquisition Method definition, Merger and acquisition method is a method of deriving pricing multiples from transactions of significant interests in companies engaged in the same or similar lines of business. Merger and Acquisition method is a method within the market approach. - Business Valuation terms / how much is my business worth Mid Year Discounting definition "Mid Year Discounting definition, Mid -year discounting is used to reflect economic benefits that are generated midyear thus approximating the effect of economic benefits being generated evenly throughout the year. This mid - year discounting is used in the Discounted Future Earnings Meth Minority Interest definition Minority Interest definition, Minority interest is an ownership interest which is less than fifty percent of the voting interest in a business enterprise. This means that the control of the minority interest holder is very limited. - Business Valuation terms / how much is my business worth Net Book Value definition Net Book Value definition, Net book value is the difference between the total assets and total liabilities of an organisation.The Net Book Value of an asset is the current book value which is the original cost minus the adjustments like depreciation,etc. - Business Valuation terms / how much is my business worth Net Present Value definition Net Present Value definition, Net present value is the present value of future cash inflows minus the cost including cost of investment calculated using an appropriate discounting method. - Business Valuation terms / how much is my business worth Net Tangible Asset Value definition Net Tangible Asset Value definition, Net tangible asset is the value of the tangible assets of the organisation minus the liabilities.In calculationof Net Tangible assets one does not include excess assets and non operating assets. - Business Valuation terms / how much is my business worth Non Operating Assets definition Non Operating Assets definition, Non-operating assets are assets that are not used and hence are not necessaryin the present ongoing operations of the organisation. - Business Valuation terms / how much is my business worth Normalized Earnings definition Normalized Earnings definition, Normalized earnings are earnings which have been adjusted to eliminate unusual items or anomalies in order to facilitate comparisons. - Business Valuation terms / how much is my business worth Normalized Financial Statements definition Normalized Financial Statements definition, Normalized financial statements are financial statements which have been adjusted to eliminate unusual items or anomalies and facilitate comparisons. - Business Valuation terms / how much is my business worth Orderly Liquidation Value definition Orderly Liquidation Value definition, Orderly liquidation value is the liquidation value at which the asset or assets are sold to maximize the proceeds. A reasonable period of time should have been employed for the sale to maximize profits. - Business Valuation terms / how much is my business worth Portfolio Discount definition Portfolio Discount definition, If a business enterprise owns dissimilar operations or assets that do not fit well together then an amount or percentage is deducted from its value as Portfolio Discount. - Business Valuation terms / how much is my business worth Premise of Value definition Premise of Value definition, Premise of value is an assumption about the likely set of transactional circumstances that can be applicable in the valuation process. - Business Valuation terms / how much is my business worth Present Value definition Present Value definition, Present Value is the current value of a future economic benefit calculated using an appropriate discounting method. - Business Valuation terms / how much is my business worth Price Earnings Multiple definition Price Earnings Multiple definition, Price/earnings multiple can be arrived at by dividing the price of a share of stock by its earnings per share. - Business Valuation terms / how much is my business worth Price Earnings Multiple Valuation definition Price Earnings Multiple Valuation definition, Price-earnings ration (P/E) is simply the price of a company's share of common stock in the public market divided by its earnings per share. By multiplying this P/E multiple by the net income, the value for the business could be determined. - Business Valuation terms / how much is my business worth Rate of Return definition Rate of Return definition, Rate of return is the return one gets over one's investment expressed as a percentage of the investment. - Business Valuation terms / how much is my business worth Redundant Assets definition Redundant Assets definition, Redundant assets are assets that are not used and hence are not necessary in the present ongoing operations of the organisation. - Business Valuation terms / how much is my business worth Replacement Cost New definition Replacement Cost New definition, Replacement cost new is the cost of replacing an existing property with one which is similar to it and is of equal utility. - Business Valuation terms / how much is my business worth Report Date definition Report Date definition, Report date is the date on which the conclusions are transmitted to the client. - Business Valuation terms / how much is my business worth Reproduction Cost New definition Reproduction Cost New definition, Reproduction cost new is the current cost of producing a new property which is identical. - Business Valuation terms / how much is my business worth Required Rate of Return definition Required Rate of Return definition, Required rate of return is the rate of return demanded by an investor from an investment to compensate for the amount of risk involved. The required rate of return rises with the risk involved. - Business Valuation terms / how much is my business worth Residual Value definition Residual Value definition, Residual value is the expected value of an asset or a Capital item at the end of a specified period. - Business Valuation terms / how much is my business worth Return on Equity definition Return on Equity definition, Return on equity is the measure of the rate of return on the equity investment in the company. The higher this ratio, the better for the company. - Business Valuation terms / how much is my business worth Return on Invested Capital definition "Return on Invested Capital definition, Return on invested capital shows the company's ability to create value and is calculated as the relationship between earnings and invested capital (interest-bearing debt + capital and reserves or net interest-bearing debt + capital and reserves. For calcu Return on Investment definition Return on Investment definition, Return on investment is the standard measure of project profitability. It is the discounted profits over the life of the project expressed as a percentage of initial investment. ROI can be increased either by reducing expenses or by increasing sales. - Business Valuation terms / how much is my business worth Risk Free Rate definition Risk Free Rate definition, Risk-free rate is the rate of return available in the market which one can get with certainity on an investment without any risk being involved. - Business Valuation terms / how much is my business worth Risk Premium definition Risk Premium definition, Risk premium is an additional return over the risk-free rate earned by investors for taking risk. - Business Valuation terms / how much is my business worth Rule of Thumb definition Rule of Thumb definition, Rule of thumb is a mathematical relationship between or among variables based which is derived through experience, observation, hearsay, or a combination of these.Rule of Thumb is usually specifically applicable to a particular industry. - Business Valuation terms / how much is my business worth Special Interest Purchasers definition Special Interest Purchasers definition, Special interest acquirers are those purchasers who believe they can enjoy economies of scale, synergies, or strategic advantages after the purchase by combining the acquired business interest with their own. - Business Valuation terms / how much is my business worth Standard of Value definition Standard of Value definition, Standard of value is the identification of the specific type of value which is being utilized in a particular engagement. - Business Valuation terms / how much is my business worth Sustaining Capital Reinvestment definition Sustaining Capital Reinvestment definition, Sustaining capital reinvestment is the periodic addition of capital which is required to maintain operations at existing levels. - Business Valuation terms / how much is my business worth Systematic Risk definition Systematic Risk definition, Systematic risk is market risk which occurs to the entire market. This risk cannot be diversified because if the market gets affected it will equally affect all the stocks. Thus systematic risk is a risk affecting the whole economy. - Business Valuation terms / how much is my business worth Tangible Assets definition Tangible Assets definition, Tangible assets are physical assets which can be touched. Eg. property, plant and equipment - Business Valuation terms / how much is my business worth Terminal Value definition Terminal Value definition, Residual value is the expected value of an asset or a Capital item at the end of a specified period. - Business Valuation terms / how much is my business worth Unlevered Beta definition Unlevered Beta definition, Unlevered beta is the beta which reflects a capital structure that does not have a debt. - Business Valuation terms / how much is my business worth Unsystematic Risk definition Unsystematic Risk definition, Unsystematic risk is the risk which is specific to an individual security and hence can be avoided through diversification. - Business Valuation terms / how much is my business worth Valuation definition Valuation definition, Valuation is the act or process that determines the worth of a business or a security or an asset. - Business Valuation terms / how much is my business worth Valuation Approach definition Valuation Approach definition, Valuation approach is the general way which is followed to determine a value indication of a business, business ownership interest, security, or intangible asset using one or more valuation methods to do the same. - Business Valuation terms / how much is my business worth Valuation Date definition Valuation Date definition, Also known as Effective Date, Appraisal Date or date of Evaluation. It is the day when the evaluation has been made or the date when the evaluation applies. - Business Valuation terms / how much is my business worth Valuation Method definition Valuation Method definition, Valuation method is a specific method used to determine the value. - Business Valuation terms / how much is my business worth Valuation Procedure definition Valuation Procedure definition, The act, manner and technique of following the steps of a Valuation method. - Business Valuation terms / how much is my business worth Valuation Ratio definition Valuation Ratio definition, The fraction which one gets by taking the value or price as the numerator and financial, operating, or physical data as the denominator. - Business Valuation terms / how much is my business worth Value to the Owner definition Value to the Owner definition, It is the value an investor estimates of a security. It is the amount according to him at which the security should be trading for.This is the price at which a convertible would trade according to an investor if it were nonconvertible. - Business Valuation terms / how much is my business worth |
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Corporate Valuation - Valuation information / Selling your cpmpany / corporation
Valuation approach is the general way which is followed to determine a value indication of a business, corporate ownership interest, security, or intangible asset.
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