VALUATION CONCEPTS AN! financial distress. Normally, there is greater value generated when assets working together are combined with the application of human capital (unless the business is continuously unprofitable) which is the case for going-concern assumption. If liquidation occurs, value often declines because the assets no longer work together, and human intervention is absent. » Fair Market Value The price, expressed in terms of cash, at which property would change hands between a hypothetical willing and able buyer and a hypothetical willing and able seller, acting at arm’s length in an open and unrestricted market, when neither is under compulsion to buy or sell and when both have reasonable knowledge of the relevant facts. Both parties should voluntarily agree with the price of the transaction and are not under threat of compulsion. Fair value assumes that both Parties are informed of all material characteristics about the nvestment that might influence their decision. Fair value is often used n valuation exercises involving tax assessments. Yetes of Valuation in Business oto Management vance of valuation in portfolio management largely depends on the t objectives of the investors or financial managers managing the t portfolio. Passive investors tend to be disinterested in ding valuation, but active investors may want to understand n order to participate intelligently in the stock market. » Fundamental analysts — These are persons who are interested in understanding and measuring the intrinsic value of a firm undamentals refer to the characteristics of an entity related to its nancial strength, profitability or risk appetite. For fundamental nalysts, the true value of a firm can be estimated by looking at its ncial characteristics, its growth prospects, cash flows and risk file. Any noted variance between the stock’s market price versus indamental value indicates that it might be overvalued or valued. cally, fundamental analysts lean towards long-term investment sategies which encapsulate the following principles: