A financial performance analysis of bundura nickel ltd by mr lenon watambwa (2019) abstract
Regression Analysis and financial statements analysis
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- Business Valuation
- Market Capitalization
- Times Revenue Method
- Electronic copy available at https://ssrn.com/abstract=3521211 10 Earnings Multiplier
- A relative valuation model
- Liquidation Value
| Regression Analysis and financial statements analysis: Mathematics as a basic science plays an important role in the field of economic management field. In processing management accounting business, the combination of mathematical models and the actual condition of enterprises and public institutions can effectively solve various management problems and evade different operational risks, which is of great significance to the prediction, planning and control of enterprise operation activities, Wang and Wang (2016). Two most important mathematical models used in financial statement analysis are regression and correlation analysis. Business Valuation: Mary Jane (2014) defines business evaluation as an analysis and review of the entire business as a whole. It is conducted to determine the overall standing and operation of a business before it is sold by the owner to a potential interested buyer. Investopedia goes further by defining valuation as the process of determining the current worth of an asset or a company. There are many techniques used for doing a valuation. An analyst placing a value on a company looks at the company's management, the composition of its capital structure, the prospect of future earnings, and the market value of assets. There are numerous ways a company can be valued. Some of these methods include Market Capitalization: it refers to the total dollar market value of a company's outstanding shares (market cap) It is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to using sales or total asset figures. Times Revenue Method: according to finance dictionary the times revenue method is a method of determining the value of a company. The method is used to determine the maximum value of a company or business by using a multiple of the current revenues. This maximum value is also called the ceiling. Electronic copy available at https://ssrn.com/abstract=3521211 10 Earnings Multiplier: It is a kind of price-earnings ratio. The PE ratio is one of the figures which serves as a gauge of a company’s financial health. It may, in fact, be useful to compare the PE ratios of different companies, in an attempt to determine where investments should be made. A relative valuation model also referred to as comparable valuation, is a very useful and effective tool in valuing an asset. Relative valuation involves the use of similar, comparable assets in valuing another asset. There's an old business adage that says an asset is only worth what the next guy is willing to pay for it. The effectiveness of comparable valuation is that the process specifically relies on the value of other assets that have been bought or sold. Investopedia went onto say a similar and effective approach can be utilized with respect to stocks. A stock is a share in a business and the fundamentals of the underlying business can be used to determine the value of similar stocks. Some of the most common and useful metrics to utilize in relative valuation include price to earnings ratio return on equity operating margin enterprise value price to free cash flow Liquidation Value: Liquidation value is the total worth of a company's physical assets if it were to go out of business and the assets sold. The liquidation value is the value of company real estate, fixtures, equipment, and inventory. Intangible assets are excluded from a company's liquidation value. Download 1.23 Mb. Share with your friends:
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