About Enterprise Valuation
Enterprise Value is ;
total value of the equity in a business
plus the value of its debt or debt-related liabilities,
minus any cash or cash equivalents available to meet those liabilities.
If the premises used are owned by the business, they form part of the Enterprise Value on the basis of their value to the business. The concept involves valuation of a continuing entity from which allocations or apportionments of overall going concern value may be made to constituent parts as they contribute to the whole, but none of the components of themselves constitute market value.
Purposes of Enterprise Valuation
1. Possible Sale /
Purchase
2. Joint Venture
3. Fund Raising
4. Accounting
Standards
5. Financial
Reporting
6. Entire Business Transfer (EBT)
Enterprise Valuation Methodology
1
Book Value Approach (BV)
2
Adjusted Book Value
Approach (ABV)
3
Price to Book Value Ratio Approach
(P/B Ratio)
4
Price to Earning Ratio Approach (P/E Ratio)
5
Discounted Cash Flow Approach (DCF)
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