Explain each of the three approaches of ordinary share valuation
a) book value b) liquidation c) P/E multiples. Which of these is
considered the best and why?
1. Choose the best measure for each of the three (profitability,
liquidity, and solvency - that means one measure for profitability,
one measure for liquidity and one for solvency). 2. Give one reason
why you chose that measure. 3. Does the measure provide information
that is more useful for investors or creditors?
Discuss the following approaches to valuation: i)Adjusted
present Value Approach ii)Excess return Model iii)Contigent
Valuation Model for undeveloped land iv) Replacement Cost
Present an argument explaining the benefits of the
earnings-based valuation method.
Explain how this valuation approach may generate accurate
results.
Evaluate the inherent challenges associated with earnings-based
valuation.
Provide suggestions for how analysts may overcome such
challenges.