Business Valuation and analysis is the key to all business queries related to assess the performance of Business. It helps understands investors and entrepreneurs â€œHow to find out their Business Worthâ€ by keeping in mind all internal and external drivers that influences the business decisions. Business valuation and analysis can be done by utilizing financial statements and information of the business to assess it financial performance and creditworthiness.
Why there is a need for Business Valuation & Analysis homework solutions:
- Need arises when someone wants to sell their business and wants to know itâ€™s worth
- It is also required at the time of Mergers and Acquisitions
- Setting Organizational goals- to calculate the growth of the business and how well the business is performing
Methods that can be utilized while evaluating Business Valuation and analysis homework solutions:
In order to conduct an effective Business Valuation, three broad methods or approaches are adopted. Depending upon the kind of business and purpose of Business valuation most treaties and financial analysts encourages to adopt more than one method. The different approaches are as follows:
- Asset Approach-
The set of assets and liabilities that are used to build the business are utilized in asset approach while conducting Business valuation. The difference between the assets and liabilities is considered as Business value. Though its sounds simple but the major challenge that can be faced while finding Business valuation and analysis homework solutions is penning down all the assets such as machinery, office furniture, computers etc. And figuring out the liabilities such as financial debts, loans, mortgages and expenses. Assets â€“ liabilities = Business Value (also referred as Ownerâ€™s equity). The challenge while using asset approach is the actual value versus recorded value for assets. The actual value of asset may be higher than the recorded one, therefore alone asset approach cannot solve the purpose of Business valuation and analysis homework solutions.
- Income Approach–
The basic purpose of running a business is earning Money. The income approach takes a broader look and valuates business on the kind of investment made in terms of time, efforts and money. The risk taken to established the business and its expansion is also taken into consideration while using Income approach for Business valuation and analysis homework solutions. Income method further calculates business value by capitalization and discounting method both methods however produce similar results. CR= DR-K wherein CR stands for capitalization rate, DR is the discount rate and K stands for the expected income growth rate on average basis. For steady and smooth business, capitalization method is the useful choice whereas if the business is new and growing discounting method give better results of Business Valuation.
- Market Approach–
On the basis of economic principle of competition, market approach has is basis set. The market approach majorly relies on the real market place signals and helps in determining Business valuation and analysis homework solutions. The market approach also adapts the process of calculating fair market value. It covers the market size, the competition and substitutes while evaluating the Business valuation. The value or price which a desired buyer is willing to pay and the value which a seller is willing to accept is the Business worth in the market approach method. None of the parties are forced to complete the deal, rather they do it willingly. The market approach method is a useful tool that determines the â€œfair valueâ€ or â€œgoing rateâ€ of the Business thus providing Business valuation and analysis homework solutions.
Start-Up Success by early valuation:
The most important and frequent question asked by any start-up investor is the value of the start-up and how it will grow. And the most common answer received is that â€œit dependsâ€, it depends upon lot of external and internal factors. The factors such as market forces of industry and the sector in which it operates, the demand and supply of money, the size of business, the competition and the willingness of investors to pay etc. All these factors help in determining the Business valuation and analysis homework solutions for start -ups.
As explained in previous section the valuation of start-ups is based on market forces and they are the determinant factor in valuation of business. If the industry or sector in which start-up business operates is at the depressed stage and future growth perspective of that sector are low, then the valuation of business will automatically be reduced no matter how well the company is growing. It will than only depend upon the risk-taking ability of the investor to pay for your business and receive good valuation as per expectations. When an early stage investor of start-up will decide to invest in the business, his decision will majorly depend on the exit size of a company, the industry in which it operates and how much return on investment he will receive versus the money he will invest.
The start-up success formula for Business valuation is in determining the following:
- Pre- Money â€“ which is the value of your business at present
- Post- Money- which is the value of your business post money investment by investor
- Cash Multiple- which is the multiple of money returned to an investor against the amount they have put on the business throughout the lifetime.
These factors if taken into consideration by any start-up firm will further help them in attracting investors and increasing the valuation of their business thus supporting Business valuation and analysis homework solutions. Being a critical topic it sometimes becomes difficult for students to find out the best approaches and ways for Business valuation.
However, there are various finance blogs, homework help solutions and expertâ€™s advices available online that teaches students how to utilize financial statements and information to assess a Business financial performance and creditworthiness. The Business valuation experts are available online 24*7 globally to provide homework solutions and research help to students. Students can take advantages of such homework help and can find the best possible Business valuation and analysis homework solutions.