Valuing Business—Concepts and Techniques

Wingsun Li ()
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Wingsun Li: Beijing Normal University & Hong Kong Baptist University—United International College

Chapter Chapter 4 in Strategic Management Accounting in a Network Economy, 2023, pp 67-99 from Springer

Abstract: Abstract This chapter outlines the fundamental concepts, techniques, and applications of business valuation. As an introductory chapter, I will provide a brief overview of four valuation approaches, including the cost approach, income approach, market approach, and option approach. The first three approaches will be discussed in further detail, focusing on how to apply these concepts in the business valuation process. However, due to the more advanced mathematical requirements of option-based valuation, this approach will not be included in the subsequent discussions. Financial information plays a crucial role in valuing a business, and management accountants have a primary responsibility to analyze this information, prepare business plans, and monitor corporate value creation. This chapter will be particularly relevant for business accountants and professional analysts, as it aims to enhance their understanding of how financial statements and corporate plans serve as essential strategic input parameters for business valuation. Different valuation approaches and their respective applications will be explored in greater detail, alongside an examination of their limitations. This is an important chapter in which its foundational concepts and techniques will be mentioned in the subsequent chapters for use in addressing a wide range of financial valuation scenarios.

Keywords: Free cash flow; DCF; Economic profit; Multiple comparable (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:mgmchp:978-981-99-5253-3_4

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DOI: 10.1007/978-981-99-5253-3_4

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