I SMTi as esa Pa cue elke) FUNDAMENTALS PRINCIPLES OF VALUATION Assets, individually or collectively, has value. Generally, value pertains to the worth of an object in another person’s point of view. Any kind of asset can be valued, though the degree of effort needed may vary on a case to case basis. Methods to value for real estate can may be different on how to value an entire business. Businesses treat capital as a scarce resource that they should compete to obtain and efficiently manage. Since capital’is scarce, capital providers require users to ensure that they will be able to maximize shareholder returns to justify providing capital to them. Otherwise, capital providers will look and bring money to other investment opportunities that are more attractive. Hence, the most fundamental principle for all investments and business is to maximize shareholder value. Maximizing value for businesses consequently sult in 2 domino impact to the economy. Growing companies provide long- sustainability to the economy by yielding higher economic output, better ns, employment growth and higher salaries. Placing scarce cir most productive use best serves the interest of different the country. The fundamental point behind success in investments is understanding what is the prevailing value and the key drivers that influence this value. Increase in value may imply that shareholder capital is maximized, hence, fulfilling the promise to capital providers. This is where valuation steps in. According to the CFA Institute, valuation is the estimation of an asset's value based on variables perceived to be related to future investment returns, on comparisons with similar assets, or, when relevant, on estimates of immediate liquidation proceeds. Valuation includes the use of forecasts to come up with reasonable estimate of value of an entity’s assets or its equity. At varying levels, decisions done within a firm entails valuation implicitly. For example, capital budgeting analysis usually considers how pursuing a specific project will affect entity value. Valuation techniques may differ across different assets, but all follow similar fundamental principles that drive the core of these approaches. Valuation places great emphasis on the professional judgment that are associated in the exercise. As valuation mostly deals with projections about future events, analysts should hone their ability to balance and evaluate different assumptions used in each phase of the valuation exercise, assess validity of available empirical evidence and come up with rational choices that align with the ultimate objective of the valuation activity.