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 a 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.
NOTE:
Methods of company evaluation we have studied are:
The
Asset-Based Approach consists of the book value method and the adjusted
net-asset method. In addition, the adjusted net-asset method is based on
three principles: replacement cost, liquidation, and going concern.
The
Income/Earning Income Approach consists of the capitalization of the
earnings/cash flows method and the discounted earnings/cash-flows method.
The
Market Approach consists of the guideline public company method,
comparable private transaction method, dividend-paying capacity method,
and the prior sales of interest in the subject business.
Income/Asset and sanity/rationality checks.
Please see attached files for the reading materials for this unit.
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