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Qualitatively New Approach to Business Valuation and Company Value

Author

Listed:
  • Peter Brusov

    (Department of Modeling and Systems Analysis, Financial University Under the Government of Russian Federation, 125167 Moscow, Russia)

  • Tatiana Filatova

    (Department of Financial and Investment Management, Financial University Under the Government of Russian Federation, 125167 Moscow, Russia)

Abstract

The objective of this work is to develop a qualitative new approach to assessing business and company value. For this purpose, two of the three income approach methods, CAPM and WACC, are modified. When modifying CAPM, a new model, CAPM 2.0, was created, within which business and financial risks were simultaneously taken into account. Moreover, for the first time, this was performed correctly and the inaccuracy, incorrectness and inconsistency of the popular Hamada model were shown. The developed approach corrects some of the shortcomings of the income approach. The new methodology significantly improves the accuracy of the assessment. The closeness of the results of the new methodology to the actual market value of Amazon company (AMZN) shows the importance and validity of this methodology, which should be used to evaluate the business and the value of the company.

Suggested Citation

  • Peter Brusov & Tatiana Filatova, 2024. "Qualitatively New Approach to Business Valuation and Company Value," Mathematics, MDPI, vol. 13(1), pages 1-20, December.
    • Handle: RePEc:gam:jmathe:v:13:y:2024:i:1:p:80-:d:1555515
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    References listed on IDEAS

    as
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    3. Jagjeevan Kanoujiya & Pooja Jain & Souvik Banerjee & Rameesha Kalra & Shailesh Rastogi & Venkata Mrudula Bhimavarapu, 2023. "Impact of Leverage on Valuation of Non-Financial Firms in India under Profitability’s Moderating Effect: Evidence in Scenarios Applying Quantile Regression," JRFM, MDPI, vol. 16(8), pages 1-20, August.
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