The Adjusted Net Asset Valuation Method – Connecting the dots between Theory and Practice

Silvia Ghi?ã-Mitrescu () and Cristina Duhnea
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Silvia Ghi?ã-Mitrescu: ”Ovidius” University of Constanta, Faculty of Economic Sciences

Ovidius University Annals, Economic Sciences Series, 2016, vol. XVI, issue 1, 521-526

Abstract: The valuation of an entity is an intricate process leading to the establishment of its market value. A company’s value is created, on one hand, by its assets and liabilities and, on the other hand, by its capacity to generate future economic benefits. In order to evaluate the equity of a company a balance sheet-based valuation method is used, most commonly the adjusted net assets valuation method. The goal of this paper is to present the theoretical background of this method as well as its practical application. We will first analyze the main theoretical issues regarding the corrections that need to be performed in order to transform the book value of assets and liabilities to their market value, afterwards proceeding to an example on how this method is applied to the balance sheet of a company. Finally, we will conclude on the importance of the method for a company’s evaluation process.

Keywords: adjusted net assets method; balance sheet; book value; market value (search for similar items in EconPapers)
JEL-codes: G12 M41 (search for similar items in EconPapers)
Date: 2016
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