An Overview of Relative Valuation (original) (raw)

Determination of Stock Prices using Relative Valuation Models Renuka .S

isara solutions, 2021

Services in the sector of finance are the backbone in a country's expansion and development of the economy. The sector of finance makes it possible to start new businesses and expand existing ones. With the growth of other mainstream industries, this eventually leads to more employment and job creation. Individuals and corporations entrust their money to the financial services industry. Commercial banks, insurance companies, non-banking financial companies (NBFC), co-operatives, pension funds, mutual funds, and other smaller financial entities make up finance sector.

Understanding Business Valuations, Shares, and Other Proprietary Interests

2004

This customized coaching module addresses business valuation theories and practices from the standpoint of corporate managers, external financiers and investors, and valuation specialists. Users of valuation technologies seek to utilize all available knowledge to the extent that their resources, efforts, and exposures can be minimized. With unlimited access to the sources of internal information, corporate managers have employed an "economic-based valuation approach" to capture direct contributions of certain operating, investment, and financing activities on firm value. Creditors and shareholders who lack a direct control over the firm’s operations often rely on an "accounting-based valuation approach" to evaluate financial statements and establish the linkage between the firm’s performance and its market value. Valuation specialists such as corporate lenders, investment bankers, professional fund managers, and portfolio investment advisors have utilized a wide range of sophisticated valuation techniques subject to their unique analytical styles and resource limitations. With an advance in computer technology, however, many valuation specialists have turned their attention to a "quantitative-based valuation approach" that allow them to not only accurately measure the independent and joint impacts of internal business activities and external market events on firm value based on sophisticated mathematical models but also identify the mispriced assets or “valuation gaps” that may occur from persistent market imperfections and the sub-rational behavior of some groups of market participants.

Relative vs absolute worth

Mathematical Modelling, 1987

The determination of priorities based on relative rather than absolute worth is sometimes questioned. This is surprising since it is commonly accepted that economic value is dependent on scarcity, and scarcity is by its very nature a relative property. This paper illustrates that when deriving priorities, relative worth is usually more appropriate than absolute worth, even though the results may sometimes seem counterintuitive. This paper also examines problems that can transpire if absolute rather than relative worth is used in situations where additional alternatives are subsequently introduced into an analysis.

Understanding Business Valuation, Shares, and Proprietary Interests

This customized coaching module addresses business valuation practices from the standpoint of corporate managers, external financiers and investors, and valuation specialists. Users of valuation technologies seek to utilize all available knowledge to the extent that their resources, efforts, and exposures can be minimized. With unlimited access to the sources of internal information, corporate managers have employed an "economic-based valuation approach" to capture direct contributions of certain operating, investment, and financing activities on firm value. Creditors and shareholders who lack a direct control over the firm’s operations often rely on an "accounting-based valuation approach" to evaluate financial statements and establish the linkage between the firm’s performance and its market value. Valuation specialists such as corporate lenders, investment bankers, professional fund managers, and portfolio investment advisors have utilized a wide range of sophisticated valuation techniques subject to their unique analytical styles and resource limitations. With an advance in computer technology, however, many valuation specialists have turned their attention to a "quantitative-based valuation approach" that allow them to not only accurately measure the independent and joint impacts of internal business activities and external market events on firm value based on sophisticated mathematical models but also identify the mispriced assets or “valuation gaps” that may occur from persistent market imperfections and the sub-rational behavior of some groups of market participants.

Asset Valuation: A Synthesis of Existing Literature and New Insights

2016

Studies on asset valuation or pricing have long been a mainstay in research on finance. They constitute one of the unique cores of the growing literature in this relatively young discipline. In finance, valuation is the process of estimating the worth of an asset. Assets include investments in marketable securities such as stocks, options, business enterprises, including intangible assets such as brands, patents and trademarks. Valuations are important not only from the point of view of investment analysis, but also includes decisions on merger and acquisition, capital budgeting, financial reporting, determination of tax liability, in litigation, and due diligence among others. Researchers have worked on various genres of valuation models; however, despite over five decades of extensive research in this area, research findings remain inconclusive. This paper argues that one of the plausible reasons behind these ambiguous findings is market efficiency, which has not been explored or ...

research proposal on; Intangible Assets; Presentation and Valuation

2021

This paper is aimed at researching the concept and accounting treatment of intangible assets as it was published by the International Accounting Standards Board and as they are perceived by preparers of financial statements and the users of these statements, and other concerned stakeholders. An intangible asset is defined by the International Accounting Standard (IAS) 38 as an identifiable non-monetary asset without physical substance. The asset must be; controlled by the entity as a result of events in the past, and something from which the entity expects future economic benefits to flow. This paper will indubitably discuss the recognition, measurement and valuation of intangible assets and goodwill for it has been observed that each organisation has a controversial way of accounting for intangibles against the IAS 38 which requires that internally generated intangibles be excluded and specific disclosures be made. I recommend that it should be of high priority that preparers of financial statements should recognise and report intangible assets in a consistent and transparent manner to foster the confidence in the financial statements.