Maximizing The Company Value

Should companies maximize profits or firm value? The fact that firms converted their financial objectives from profit maximization to value maximization has earned company valuation studies to have a privileged place both in academic and in practice.

Finance, is money, funds, or capital that individuals or institutions can make use of.

Financial Management; is the provision of funds needed and the management of these funds.

When we look at the generally accepted goals of businesses, these are;

• To increase public welfare by producing goods and services,
• To keep employment in the business continuous,
• To ensure the continuity of the business,
• To increase production and sales,
• To increase the business’ market rate,
• To keep the operation of the business continuous,
• To reduce the costs of the business,
• To maximize the profit of the business,
• To maximize the value of the business,

Profit Maximization: One of the goals of businesses is to increase profit, but it cannot measure company performance and / or investors’ earnings alone.

Value Maximization: Maximizing the business value or the value of stocks in business decisions; aims to increase the assets (wealth) of partners/shareholders.

In modern financial management approaches, maximization of the market value of the firm is preferred over the maximization of profit.

Companies; will be able to learn the market value of the company and share it with their shareholders, by getting Firm valuation services.

The values reached with the annually performed Firm Valuation will be able to demonstrate the performance of the management in the relevant years. Also, with the Brand Valuation study, which is a complementary study, the performance and/or market/marketing strategies of the product and marketing departments can be measured.

A Firm Valuation Report; although expressed in concepts such as current value, market value, firm value, company value; can be accurately defined as the ‘market value’ of the business/firm /company.

A comprehensive Firm Valuation Report prepared periodically; should include the tangible and intangible assets of the firm while estimating its value; the components of the final value achieved should, therefore, be comparable.