4 whatisvaluation

Unformatted text preview: the company's income and expense figures. 4 What is Valuation value can be defined in terms of the price an individual investor or group of investors is willing and able to pay to acquire a specific asset. Often one buyer will be willing to pay more for a specific asset (a house, a piece of land, a factory or a work of art) than competing buyers. Perhaps because the buyer perceives the asset, for whatever reason, to be of greater personal value. There is thus a strong behavioural element affecting the determination of asset values in any given set of circumstances 5 Why Valuation Knowing what an asset is worth and what determines that value is a pre­requisite for intelligent decision making – in choosing investments for a portfolio, in deciding on the appropriate price to pay or receive in a takeover and in making investment, financing and dividend choices when running a business. 6 Who wants to value The following entities may require valuation to be carried out: 1. A buyer or a seller 2. A lender 3. An intermediary like an agent, a broker 4. Regulatory authorities such as tax authorities, revenue authorities 5. General public 7 Critical...
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