There are diverse valuation techniques that clear be utilize to determine the join share price of a private company; in this geek we cant use DCF analysis delinquent to lack of information we must construct eightfolds based on the information given (that is information about comparables two companies that match (from financial point of view position on market, sales, leverage, typesetters case of product) our target company.
We calculated several multiples for our public-traded comparables, and, using average tug, defined the target price (francs, per share):
As you can see, we accepted a big range of results depending on what financial index finger we apply for our target company. First, taking into the account the nature of to each one multiple, lets decide which are lying to us.
Price to earnings ratio, or P/E. For this multiple we used figure 7,65, which is the EPS for Veuve Clicquot in 1965. It is the most common multiple, which is widely used to make a quick valuation of a company. In this case, we received price for Veuve Cliquoct which is equal to (roughly) 170 francs per share. The main drawback of this multiple is that 1. it doesnt take into account the capital structure of companies and 2.
earnings, as it was quoted in the text, can be greatly influenced by business relationship decisions. Also, according to financial rumors of Veuve Cliquot, in 1964 it suffered a substantial lour in net income. As we dont come the reason for it, we cant be sure that it was not accidential. Thus, we can make a conclusion that in this case we definitely shouldnt use this multiple.
The same logic can be applied to other multiples based on the income statement indicators. They seem to be volatile and not trustworthy (which is to a fault supported by specialists, who advise to ignore earnings figures for the intent of valuation).
On the contrary, multiples based on the balance sheet base comparable results (and those ones with...If you want to get a full essay, coordinate it on our website: Ordercustompaper.com
If you want to get a full essay, wisit our page: write my paper
No comments:
Post a Comment