Assessment Approaches: The Income Approach (II)

Elena Valentina Țilică and Radu Ciobanu
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Elena Valentina Țilică: Bucharest University of Economic Studies
Radu Ciobanu: Bucharest University of Economic Studies
Authors registered in the RePEc Author Service: Elena Valentina Tilica

CECCAR Business Review, 2023, vol. 4, issue 6, 30-36

Abstract: According to the International Assessment Standards, in order to obtain a certain type of value, the three approaches of the unanimously acknowledged and applied value may be used, that are substantiated on the economic principles of substitution, variable proportions or benefits anticipation: the cost, market and income approach. In the article hereby we present aspects concerning the income approach, which consists of setting the value of the enterprise from the perspective of taking into consideration its capacity to generate profits/earnings for its future functioning. Financially, no investment has sense than by the cash flows likely to be achieved as a result of it. Thus, it is deemed that the amount of any invested capital must be estimated in terms of the earnings brought in the future.

Keywords: assessment; income approach; discount rate; future cash flows; updating the cash flow method; profit capitalization method; terminal value (search for similar items in EconPapers)
JEL-codes: G17 G32 M41 (search for similar items in EconPapers)
Date: 2023
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Journal Article: Assessment Approaches: The Income Approach (I) (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ahd:journl:v:4:y:2023:i:6:p:30-36

DOI: 10.37945/cbr.2023.06.04

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