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Essay / Research Paper Abstract
This 7 page paper looks at a number of different ways a company can be valued. Each method is explained and the advantages and disadvantages are discussed. Models discussed include the book value methods, the Edwards-Bell-Ohlson models and the dividend discount models. The bibliography cites 3 sources.
Page Count:
7 pages (~225 words per page)
File: TS14_TElesvalue.rtf
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Unformatted sample text from the term paper:
of the book value. The value of the physical assets of company is used to give the book value of a firm. The book value may be defined as the
net assets of a company; that is the assets less the liabilities. In this paper we will uses the formula of book value being total assets, less total liabilities plus
any preferences stocks that are outstanding. This can be used as an overall value, or if divided by the number of shares can give a book value per share. This
process is simple but as shown, it tends to give a low figure Figure 1 Book value Book value 31/12/2004 Total assets 252,948.50 Total liabilities
46,415.00 Book value 206,533.50 For ongoing companies this has been found to be a model which will under value a company as this is not looking at
the company as an income stream, it is only looking at the assets. It has been established when looking at companies where the main value is in physical assets. The
price to book value will usually be in the region of 3.5 to 4, meaning that for each $1 of physical assets owned by the company the share price may
be in the region of $3.50 - $4 (Keating, 1997). It is also worth noting that this multiple was developed only for firms where physical assets were the majority
of asset as such other firm types, such as virtual companies may differ from this pattern. This multiple was developed as a
simple rule of thumb allowing the investor to assess the potential level of under or over valuation of a share when based on physical assets alone. To assess if this
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