Company Valuation in Finance – Different Types of Valuation – Value is a relative concept. The meaning of the word is different for each soul. Its purpose is also different. Here we will analyze the variation of the term value from the point of view of financial managers and investors.
In this Article briefly discussed Company Valuation in Finance – Different Types of Valuation. Lets see
1. Face Value:
The value of a financial asset that is written on the balance sheet is called the face value of that asset. In the beginning, sometimes the written price and the market price are equal, but with the passage of time, the gap between them also increases. But in case of fixed preference shares and bonds, the written price is usually paid on maturity.
2. Market Value:
The market value of an asset generally refers to the price at which an asset is traded in the current market. According to I. M. Pandey, “Market value of an asset or security is the current price at which the assets or security is being sold in the market.” Many factors affect the market value of the stock. As a result, market prices fall sharply.
3. Intrinsic Value:
The intrinsic value of a security is the current value determined after considering the basic elements such as income, risk, duration, etc. of a security.
4. Going Concern Value:
A moving organization is usually the price at which it can be sold. The current value of the future cash inflows of a firm at a fixed discount rate, depending on the specific lifespan of the firm, is called the running price. Note that the moving price will always be higher than the closing price.
5. Book Value:
The exorbitant value of an asset is the accumulated depreciation except the purchase price of the asset. It is also called accounting value. Excluding preference shares and other external assets from the total assets mentioned in the balance sheet, what remains is called external value. Divide the total value of the firm by the total number of ordinary shares, which gives the value per share. The external value of an asset has no effective relation to its market value.
6. Liquidation Value:
The liquidation value of an organization that sells assets at the time of liquidation of its business is its liquidation value. Note that Intangible Asset is not considered in determining liquidation value.
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