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Under a “Capitalization of Earnings” approach, the appraiser will consider both historic and future income probability, based on a steady stream of revenue, and discount these streams to realize a netpresentvalue, while using appropriate rates of capitalization.
Estimate Terminal Value – Terminal Value is then estimated either by using a terminal exit multiple (usually an EBITDA multiple) or with a Terminal Growth Rate ( Gordon Growth Method). Now, let look at the obstacles analysts face when valuing a declining company using a relative valuation method.
Adjusted NetBookValue Adjusted NetBookValue is the BookValue of a business that has been adjusted to reflect the current market value of the assets and liabilities of a company. Asset Value Asset Value can refer to one of two things: the bookvalue of a specific asset (i.e.,
Net operating income attributable to common shareholders is a non-IFRS measure which represents the net income attributable to shareholders, excluding the after-tax impact of non-operating results, net of net income (loss) attributable to non-controlling interests (non-operating component), preferred share dividends and other equity distributions.
Market-based methods like Comparable Companies Analysis and Precedent Transactions Analysis offer relative measures of value based on market data. Income-based methods such as Discounted Cash Flow analysis focus on future cash flows to determine value. For more insights, do have a look at our article on market multiple based valuation.
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