The debt value is the net financial liabilities at the valuation point, and all the rights and interests of the shareholders of the enterprise are paid-in capital, surplus reserve fund, surplus public welfare fund and undistributed profits.
Company value is the present value of the expected free cash flow of an enterprise discounted according to its weighted average cost of capital, which is closely related to the financial decision of the enterprise.
Enterprise value evaluation is a comprehensive asset and equity evaluation, which is a process of analyzing and estimating the overall value of the enterprise, the equity value of all shareholders or part of the equity value under a specific purpose. At present, the international evaluation methods are mainly divided into three categories: income method, cost method and market method.
The income method determines the value of the appraised object by capitalizing or discounting the expected income of the appraised enterprise to a specific date. Its theoretical basis is the discount theory in economic principles, that is, the value of an asset is the present value of the future income that can be obtained by using the asset, and its discount rate reflects the rate of return of the risk of investing in the asset and obtaining income. The main methods of income method are cash flow discount method (DCF), internal rate of return method (IRR), CAPM model and EVA valuation method.
Based on the balance sheet of the target enterprise, the cost method determines the value of the evaluation object through reasonable evaluation of the assets and liabilities of the enterprise. Its theoretical basis is that the price paid by any rational person for an asset will not be higher than the price of replacing or buying a substitute with the same purpose. The main method is replacement cost method (cost additive process).
Market method is to compare the appraisal object with equity assets such as enterprises that can be referenced or have transaction cases in the market to determine the value of the appraisal object. Its application presupposes that similar assets will have similar prices in a complete market. The commonly used methods in market law include reference enterprise comparison method, merger case comparison method and price-earnings ratio method.