QUESTION: Your friend is selling her small business for GH¢ 50, 000. This is the total...

QUESTION:

Your friend is selling her small business for GH¢ 50, 000. This is the total value of all her current and fixed assets. Is this the accurate value of her enterprise? Discuss with regards to the four methods of company valuation. Include a discussion on how the different valuation types can be calculated and the advantages as well as disadvantages of each method.

Solutions

Expert Solution

The total value of the company can be calculated using different methods of valuation which are as follows-

A. Cash flows valuations using discounted cash flows method which will be helpful in presenting out the overall value of the business usingpresent rate assignment to the overall cash flows which will be receivable by the company in future.

B. the valuations of the company can also be used by comparables method by comparing the books of company with respect to that of its competitor and assignment of value of company in order to that of industry so that there would be a fair valuation of proper evaluation according to the industry standards

C. The valuation of the company can also be done through market valuation method in which there would be a valuation of the Assets and liabilities of the company as per the current market value of the company and it will be discounted in presenting out the fair value of the company

D. Book value method is also used as a traditional method by the company in order to find out the proper value of the company by ascertainment of the book value of the acid in order to find out the value of the company.

jeff jeffy answered 1 year ago

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