Valuation
Valuation of companies and real estate is a complex process involving different methods and approaches. The main types and methodologies of valuation are described below.
Company valuation
The assessment of the company's value is based on the analysis of historical data and the projection of future business results. This process includes:
Basic assessment methods
Discounted cash flow (DCF) method
This method estimates the value of a company based on expected future cash flows, which are discounted to present value using an appropriate discount rate.
The net asset method
This method estimates the value of a company based on total assets less total liabilities, which gives the company's net assets.
Method of price multipliers
This method uses multiples (such as P/E or EV/EBITDA) from similar companies to estimate the value of the company.
Company valuation also includes sensitivity analysis and adjustment of data from financial statements to ensure the realism of future projections.
Real estate valuation
Real estate valuation also uses different methods, the most common of which are:
Main assessment methods
Comparative method
This method involves comparing the property being appraised to recently sold similar properties in the same area. This method is most suitable in organized markets where there is reliable data on transactions.
Cost method
This method is based on the calculation of the costs required to build a similar property, including land and construction costs, less depreciation.
Income method
This method estimates the value of a property based on the expected income that the property can generate over its lifetime. This method requires precise determination of future income and expenses, which are then discounted to present value.
