Question
In: Finance
How do financial managers determine the value of a business?
How do financial managers determine the value of a business?
Solutions
Expert Solution
Financial managers will be determining the valuation of the business using-
A. Market capitalisation methods-this is one of the important method in order to determine the cost of the company by taking an appropriate capitalisation rate and charging in on to the overall earnings of the company in order to find out the market capitalisation of the company as a whole.
B. They can also use discounted cash flow method because this is the most adopted method in order to determine the overall market value of the company as these methods will be relating to the overall cash flows of the company and they would be discounted at the present value in order to arrive at the total value of the company.
C.they can also be adopting various kinds of cost with strategies and using a markup and then arriving at the total value of the turnover and then estimating the value of profits to arrive at the total value of the company
it can be said that these are the matrix which are used by the financial managers and they can be also using the mix of these strategies in order to arrive at the total value of the firm and these financial managers are not well equipped with the traditional valuation methods which a business analyst will be adopting.
jeff jeffy answered 1 year agoRelated Solutions
How do managers use Key Financial ratios to determine business operations. Discuss the various ratios and...
What is the Time Value of Money and how do financial managers use it to make...
Q1. How do financial managers create value for the firm? Explain and provide examples where necessary....
How do accountants and financial managers differ in their use of financial information? Why is cash...
How do accountants and financial managers differ in their use of financial information? Why is cash...
How do accountants and financial managers differ in their use of financial information? Why is cash...
Financial managers should be able to determine how risk factors into a company’s decision to expand...
Financial managers should be able to determine how risk factors into a company’s decision to expand...
How do you determine the “value” of a product or service?
What are the limits of financial statement analysis and how do managers manipulate ratios for their...
- Decision Variables S T Minimize 1.8S + 2.20T Subject to: Potassium 5S + 8T >= 200...
- A neurologist needs to counsel a stroke victim and her husband about possible outcomes, treatment options,...
- Case Study: Personal Beliefs in the Workplace Don Shakow was a prominent professional who worked in...
- 1: Competency framework usage is the modern best practice in management. What is meant by competency...
- A 19.34 g mixture of sugar (C12H22O11) and table salt (NaCl) is dissolved in 231 g...
- Young and Company claims that its pressurized diving bell will, on average, maintain its integrity to...
- 1) Alternative compiled code sequence using instructions in classes A, B, C. What is the average...