frequent questionscompany valuation
What does value a company mean?
The valuation is a model used to calculate the range of values where there may be found the price of the company as an ongoing economic entity.
Why is a company valued?
There can be several reasons: i) To learn the price at which it may be purchased or sold. ii) To learn its position vis-à-vis the competition. iii) To define an expansion plan. iv) To learn about the actual net worth of owners, among other.
How is a company valued?
The valuation exercise requires two fundamental elements: Common sense and experience. From that base, financial and commercial forecasts are combined with the Company’s long-term strategy.
What is the best method to value companies?
All existing methods to value a company are valid. It all depends on the specific conditions of each Company. The Discounted Free Cash Flow is one of the most common.
Can a company be sold at the price its valuation yields?
The valuation generally yields a range of value.
Is the Company’s General Balance sufficient to learn its value?
Usually, the accounting value of assets does not correspond to their actual value. Likewise, company forecasts are a determining factor to establish its value. Therefore, the General Balance is no a valid reference to establish the value of the Company.