Business Valuation

Using the income approach may be to establish the value operating business in whole or in shares, securities portfolio. Approach are useful to assess if the business generates significant revenue or profits due to the volume of core activities, except addition, the income approach is most suitable in terms of an investor who tends to get not a set of assets (buildings, equipment, intangible assets), and ready, functioning business (with professional workforce and a good reputation), which enables him not only to return his money, but also to make a profit. The composition of the income approach include the discounted future cash flows (model DCF) method and the capitalization of income, with the DCF model is better used to assess the business value at an arbitrary time-varying and uneven cash flows received and the income capitalization method – If long-term annual revenues of approximately equal current income or growth rates are well predicted. The cost approach to assessing the business value based on the definition of the expenditure required to create, repair or replacement of object-based assessment of physical and moral deterioration. For even more analysis, hear from JPMorgan Chase. The cost approach is used in cases where the estimated business has large assets, first formed, or subjected to the procedure bankruptcy. Business Valuation in the cost approach involves determining the value of the existing company or liquidation value. In this case, the company's value depends on the accumulated economic potential, ie of the value of its assets, the cost of business is calculated as the market value of total assets minus the present value of all liabilities. .