Theoretical and Methodical Aspects of Assessment of the Enterprise Value
AbstractThe article characterises the "market capitalisation", "market value" and "fair value" (of an enterprise) notions and determines relations between them. It offers to use the indicator of fair value when assessing effectiveness of enterprise activity and when determining potential of future growth. It determines key methods of assessment of a fair enterprise value using the income approach, which is based on discounting future revenues of an enterprise. It characterises specific features of the use of the expenditure approach methods, which are based on determining net assets of the enterprise - object of assessment. It provides methods of assessment on the basis of a comparative analysis of the fair value of shares and value of a similar enterprise, which belong to the market approach. It shows advantages and shortcomings of methods of each approach to assessment of the enterprise value. It identifies that the most effective method of assessment of the enterprise value is the model of discounted cash flows, which has modifications depending on the goals of assessment. It proves the model of discounted cash flows objectively reflects enterprise's drive for stable growth and generation of the forecasted profit.
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Bibliographic InfoArticle provided by RESEARCH CENTRE FOR INDUSTRIAL DEVELOPMENT PROBLEMS of NAS (KHARKIV, UKRAINE), Kharkiv National University of Economics in its journal Business Inform.
Volume (Year): (2013)
Issue (Month): 10 ()
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Web page: http://www.business-inform.net
enterprise value; fair enterprise value; market capitalisation; model of discounted cash flows;
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