Application of Simulation-based Approach for Determining the Value of Companies Operating in an Environment of Uncertainty

Petar Rangelov
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Petar Rangelov: University of National and World Economy, Sofia, Bulgaria

Ikonomiceski i Sotsialni Alternativi, 2022, issue 1, 111-131

Abstract: The article focuses on a specific valuation technique based on probabilistic simulation of value-relevant factors determining the intrinsic value of companies. In this paper I present the practical aspects and relevant problems related to the application of this type of valuation methods. Basic probabilistic processes applicable to different enterprises depending on their economic characteristics are analyzed. In the practical part, the presented evaluation technique is applied for evaluation of a Bulgarian pharmaceutical company, as the main advantages and results are presented.

Keywords: Monte Carlo simulation; Ornshtain-Ulenbeck process; free cash flow to the firm model; enterprise value (search for similar items in EconPapers)
JEL-codes: C53 G17 G32 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:nwe:iisabg:y:2022:i:1:p:111-131

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