What’s Company Valuation?

What is the difference between company valuation and firm valuation?

There is no difference. Both concepts are the same.

How is a firm value or company value calculated? There are several Firm valuation methods to calculate Company Value.

The main firm valuation methods and approaches are as follows;

1. Assets/Property Approach
2. Revenue Approach
3. Market Approach

Are all Company Valuation Approaches applied to each company?

The most appropriate firm valuation approaches are determined for each firm by taking into account such factors as the firm’s activity, its asset structure, whether it is active or not, cash generation, etc.

What is the best definition that can be used to express the Company’s Value?

It is the Company’s Market Value. It is also defined as Company Value or Firm Value (FV). There are subtle distinctions between definitions. ‘Market Value (MV)’ is important.

Does it matter whether the company is a Joint Stock Company or a Limited Company in the Company Valuation study?

The operations of the firm are essential in firm valuation.

Is EBITDA a valuation approach?

EBITDA stands for Interest depreciation and profit before tax. It is a method used in the Market Approach. It is one of the market multipliers. It is an important parameter. EBITDA: Earnings Before Interest Taxes Depreciation and Amortization

Market Multipliers / Financial Ratios

1. Price / Earnings Ratio (P/E) b)
2. Market Value / Book Value Ratio (MV/BV)
3. Firm Value / EBITDA (FV/EBITDA)
4. Firm Value / Net Sales (FV/Sales)

Are multipliers used other than financial ratios?

Yes. Factors indicating the volume of activity in the relevant sector like the number of subscribers, the number of customers, the closed area of construction (m²), the number of houses built, the number of fruit trees, the number of vehicles, the number of entries to the website etc. can be used as a multiplier in the valuation of the firm.

Is net profit important in calculating the Income-Based Company Value?

In the Discounted Cash Flow analysis (DCG Analysis) method, which is the most used method of firm valuation approaches, the Operating Profit is taken into consideration and Free Cash Flows are calculated.

How long does it take to prepare a firm valuation report?

The estimation of the market value of a firm is a process. Analysts examine financial statements / financial data, investigate the industry, companies, products related to the firm. Analysts also examine the production facilities and the company headquarters before preparing the valuation report. The expert’s experience, knowledge, and opinion are also important along with all the data and research about the company. For this reason, the completion time of each valuation report is different.

Is there a difference between the market value of the firm and the share value?

First, the Market Value of the firm is estimated and the value of a share is reached by dividing the result by the number of shares.

Is the Book Value of the Company the value of the company?

Book value does not equal the value of the company. However, it is used as an element of comparison between companies in some sectors.

Does the calculated Company Market Value exceed the Book Value?

The company value may be above the book value or it may have a value below it.

Should assets be valued in determining the Company Value?

It is preferable to have real-time valuation reports of the real estate and machinery and equipment registered in the company’s assets. Reports about asset values can be made to Real Estate Appraisal Companies during the firm valuation process.

Valuation of intangible assets such as trademark and reward certificate can be made by experts of asset valuation in this area or by firm valuation institutions.

It is important to turn firm assets into market value. It gives us, the Net Asset Value / Adjusted Book Value. Analysts often want to see the Adjusted Book Value, it is an important reference point in the decision for using other approaches.

Would the value of the company be different when buying or selling the company?

Analysts conduct the ‘Valuation’ activity impartially and independently. After the firm valuation report is prepared, a presentation can be made at the meeting for partners to buy or transfer shares within the company. However, the Valuation Report is prepared to estimate the most probable market value not for the subjective valuation of the investors. Analysts cannot make such a commitment. It is not within the scope of investment consultancy. It is a report form prepared to help decision-makers and contains information about the company.