Question

In this paper, please discuss the major methods of company valuation that we have studied. In doing so, explain each method and compare their advantages and disadvantages with the other methods you choose to discuss. Support your discussion with references. Papers will be assessed on the following criteria: Explain the market capitalization. Explain the book value. Explain (expected) future earnings. Provide narrative on other methods (minimum of two). Compare market capitalization, book value, and future earnings methods (and your other chosen methods) with each other to include their advantages and disadvantages.

Answer 1

There are multiple methods depends upon the estimated standards set by the administration. Though, the principal purposes involve the normalized profit, market valuation, market capitalization approach, book value process, including future earning method.
The method normalized profit collects economic data, especially, the profit of the firm's last back-to-back years to obtain the average profit.
The process market valuation estimates the importance of a company and features with regard to the selling price of a related company or resources. It suggests this process takes control interest into compensation for valuing the business.
The market capitalization process is utilized to evaluate the company based on the business value of its dividends. The most important market capitalization intimates the company works great in the market.
The book value approach covers the company’s net assets to determine the significance of the company. It is measured by decreasing total assets from indefinite assets.
Future earnings method is one of the basic processes accepted by all the company which assists to know the PV of the company with the expected future incomes. This process involves coordinated PV and the weighted average cost of assets.
The methods that explained before for the valuation of business are important when a self finances in a distinct organization. Despite this, The normalized profit benefits to knowing the profitability, the business valuation process is managed to decide the appropriate market value of the business, moreover, market capitalization represents the market value of the company’s assets.
However, The book value method says that the net assets of the company including the expected earnings method help to measures the PV of expected incomes. These methods considerably improve an investor to perform the most beneficial investment choice.

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