Roles of valuation – ginanampanan (importance)

PORTFOLIO MANAGEMENT

Fundamental analysts – people who analyze financial perf of a company / easy analyze each corp.
(test/assessment for supporting evidence) - (FS, economic conditions) (publicly listed comp – publicly
listed/traded)

Chartist – analyzes patterns TRENDS – UPWARD DOWNWARD GRAPHS

Information traders – searching new informations (insider trading - FIRST TO INVEST)

ANALYSIS OF BUSINESS TRANSAC. AND DEALS

Create mismatch

Analyze if theres a great deal (sales forecast) estimate value

Set financial performance (how much they offer)

Divestiture (let go - SELL)

CORP FINANCE

Assess management (if needed to expand) ADDITIONAL

Public – will be listed company

Investor – issue shares

Acquire loan – cash to payable

LEGAL AND TAX PURPOSES

Regain ratio – add additional contribution

Liquidation – file bankruptcy / financial compromise (need evidence)

Estate tax 6% – needed to pay – transfer property (w/tax)

Juridical personality – katauhan sa batas (ari arian - heirs)

VALUATION - Current values of assets to transfer

UNDERSTANDING OF THE BUSINESS

Comparing business (wrong because of different industry)

Competitive analysis (must same industry)

FORECASTING FINANCIAL PERFORMANCE

Top down approach – start to macro level (analyze competitors) to industry specifics

Bottom up app – start to company (assist business) to macro level (int’)

SELECTING THE RIGHT VALUATION MODEL

Inherent charact – depend on the situation

Sensitivity analysis

Changes input – affect outcome

Current ratio (measure liquidity) CA/CL

Situational adjustments

Firm specific – adjust based on current problem

APPLYING VAL CONC

Make recommendations/ conc.

Industry rivalry

Competition / competitors

Monopoly – less to know competition (higher profitability)

New entrance

New player – higher cost

Substitute (interrelated products)

Replace

Complement

Used together (printer/ink)

Supplier power

Influence price (better terms – high cost to buyer) low profit for buyer – high profit from supplier

Buyer

Product – low cost

Horizontal – compare year

Vertical – percentage pf base amount (1 year)

Ratio analysis – sales to expenses (fs)

Liquidity, solvency, profitability