Asset Based Valuation Flashcards
Asset based valuations work well for firms that (2)
do not have a high proportion of intangible assets
Have a high proportion of CA and CL
Asset based valuation uses
estimates of the market or fair value of the companies assets and liabilities
Asset based valuations often used together with
multiplier models to value private companoes
Increased disclosure of fair values by public firms means that…
asset based valuation can supplement present value and multiplier models of valuation
Difficult to analyse companies with
significant PPE - due to their difficulty to determine market value
Assets owned by public companies are very extensive so a____
piece-by-piece analysis is impossible, and transitioning asset value from book value to market value is a non-trivial task
Asset based valuation has been applied to _____ companies, _____ companies and formerly ______ that were ______
financial, natural resource, going concerns, liquidated
Asset based valuation may be appropriate for ____
the winding up of a firm since its value as a going concern might be less than its value in liquidation
Banks and finance companies largely consist of loan and securities that can be_____
priced based on market variables
Four Different Approaches for Valuation of a Financial Services Company
DCF
Market Approach - comparables (P/CF, P/B, P/E after adjusting for differences in risk and growth)
Adjusted BV, going concern - adjusted BV of assets to better reflect MV, adjusted value of equity used to value company
Adjusted BV, orderly liquidation - appraiser adjusts the BV to better reflect liquidation values and calculates the liquidation BV of equity
Equity valuation models are used to estimate
intrinsic value
Choice of model depends on
availability of information to input to the model
