CASE STUDY

INTRODUCTION

This gives out the introduction to the variety of of frameworks & also
the techniques that are made use by the entities. It shows the major
4 types of approaches that is used for valuation. The different
methods have their own advantages & also have disadvantages.
There is also a view where combining them can be very helpful for
the entities in valuation. It also gives out the considerations & other
challenges that are there in the same for the entities.

PROBLEM STATEMENT

The challenge for the situation is that deciding about the approach of
valuation for the entities that they take into consideration regarding
the uniqueness of each feature of the assets. Also about the hurdles
that may come up while risk variable estimation.

Hence the method should be found out such that it is accurate and
also could be relied on the same while considering the future factors
& also the growth aspect. So the problem of this finding out the best
method that can be considered for the valuation.
ANSWERS

1.

 “Specific Asset Values”

This is such a approach where valuing process involves

valuation of the entity on the basis of accounting, cost
data replacement & liquidation.

Advantages:

a. This method has the benefit in such a way that it

gives out the detailed understanding regarding the
assets specific value & also the nature of it.

b. This could be very beneficial where assets in

secondary markets are active or while replacing cost
regarding the holdings provides as a beneficial
measuring instrument about the value.

Diadvantages:

a. This might not be so useful when the value of the

entity is depending on the factor like human
talents that are unique.
 b. It can also be a lacking feature when when they
are dependent on the advantages that is of
technological in nature.

 “Multiples”

This approach makes use of the information i.e valuation

details that already has been revealed by way of
transactions of the market.

There is a use of the multiples entities that are

comparable or by the pacts of entities.

Advantages:

a) The method of working is relying the views that of

the market which is very accurate in terms of the
data that is provided.

b) This method is helpful as it is quickly done & also the

easy way for the motive of value estimation.

Disadvantages:

a. The lacking feature here is that it can be complex

for getting the proper entities that could be
compared for the motive of valuation.
 b. The method here uses judgements that is
subjective & gives heavy reliability on outside
party judgement.

 “Present Value Models”

In this way of valuation there involves the concept of

discounting a flow that is future expected benefits & back
of present value. There is also consideration of “Time
value of money” & also the required returns for the
investors.

Advantages:

a. This helps for accomodating forecasts that are

detailed & also takes into account risk consideration.

b. It can also give the insights regarding the

consequences of valuation & also other such
scenarios.

Disadvantages:

a. There is a expectation for the explicit forseeing for

the benefits that are for future.
 b. When there are even a minute variation in
forseeing it could lead to major disturbances in the
estimate.

2.
3.

A stream of anticipated future benefits is discounted to their

present value in the present value approach. This strategy
comes in a number of versions, each with unique traits and
advantages. The dividend growth model concentrates on
anticipated future cash payouts and expects that these
dividends will increase continuously over time. This method is
appropriate for valuing a company's stock and does not account
for interest on debt. When money is handled at the corporate
level and distributed inside the business, the "Weighted
Average Cost of Capital (WACC)" technique is appropriate.