1. cash flow discount method (DCF): This method evaluates the enterprise value by forecasting future cash flows and discounting them to present value. Cash flow usually comes from business activities, investment activities and fund-raising activities of enterprises. DCF method considers the time value and is a commonly used evaluation method.
2. Relative valuation method: This method evaluates the enterprise value by comparing similar companies (in the same industry or market). The relative valuation method is based on the market pricing of these similar companies and adjusted according to the specific factors of the enterprise.
3. Asset-based method: This method evaluates the assets of an enterprise item by item, including fixed assets, intangible assets and current assets. , to determine the enterprise value. Income method: this method evaluates the value of an enterprise by predicting its future income and discounting it to its present value. Income method is usually based on the historical income and future development prospects of enterprises.
4. The results of enterprise value evaluation can be used for many purposes, such as investment decision: investors can use the results of enterprise value evaluation to decide whether to invest in a company or enterprise. M&A and sale: enterprises can use the results of enterprise value evaluation to determine M&A or the transaction price at the time of sale.
5. Debt financing: Banks and other financial institutions can use the results of enterprise value evaluation to decide whether to provide loans or financing. Corporate governance: management can use the results of enterprise value evaluation to evaluate the company's performance and strategic direction.
Enterprise value evaluation has the following advantages.
1. Understand the true value of the enterprise: Enterprise value evaluation can provide accurate information about the true value of the enterprise and help investors and management to understand the economic situation and potential investment opportunities of the enterprise.
2. Assist M&A and sales: Enterprise value evaluation can help companies determine reasonable transaction prices in M&A and sales, and help companies make better strategic decisions.
3. Improve the efficiency of debt financing: Banks and other financial institutions can use the results of enterprise value assessment to evaluate the company's credit risk and debt financing ability and improve financing efficiency.
4. Improve corporate governance: Enterprise value assessment can help management evaluate the company's performance and strategic direction, help the company to formulate better development strategies and improve corporate governance.
5. Determine the investment decision: Investors can use the results of enterprise value evaluation to determine the reasonable price of investing in a company and help investors make more informed investment decisions.