Research On Financial Valuation

The research on financial valuation is an important problem in corporate management and investment.In modem textbooks about corporate finance,investment and accounting,the term of valuation is frequently used,the valuation of firm value and other asset value also become a very important approach to manage enterprises. Every asset,financial as well as real,has value.The key to successfully investing in and managing these assets lies in understanding not only what the value is,but the sources of the value.Any asset can be valued,but some assets are easier to value than others,and the details of valuation will vary from case to case.Thus the valuation of a real estate property will require different information and follow a different format from the valuation of a publicly Waded stock.In general,the valuation of firm value is very complex. This thesis aims to research the fundamental financial valuation theory.The objective of financial valuation is to measuring the value of going-concern enterprise.The value of a firm is the present value of its expected cash flows,discounted back at a rate that reflects both the riskness of the project and the financing mix used to finance it.Much of the theory and most of the models developed in corporate finance are based on this premise of maximizing firm value. The thesis consists of 9 chapters.The main problems and viewpoints of every chapters are discussed as follow: Chapter 1, nterprise Performance and Financial Valuation? is a starting point to the research of financial valuation in which backgrounds on business environment such as firinsperation performance.Then,discussed the principle of financial valuation.Ln today抯 fast-changing business environment,flnancial management requires using valuation to achieve the optimal match between a firm's profitability and liquidity.Management抯 success in this mission is best measured by the value created for shareholders. Chapter 2, pproaches to Financial Valuation?,chiefly addresses the methods of financial valuation.In general terms,there are three approaches to valuation.The first,discounted cash flow valuation,relates the value of an asset to the present value of expected future cash flows on that assets.The second,relative valuation,estimates the value of an asset by looking at the pricing of omparable?assets relative to a common variable like earnings,cash flows,book value,or sales.The third,contingent claim valuation,uses option pricing models to measure the value of assets that share option characristics.There can be significant differences in outcome,depending upon which approach is used.In addition,the author appraised the relationship between financial valuation and accounting information. Chapter 3, he Discounted Cash Flow Model----Analysis of Cash Flow?,mainly discusses the DCFM,the basic approach of financial valuation.Much of the tedium in valuation is a direct result of having to estimate cashflow.There can be no discounted cashflow valuation without this,though.This chapter examines the process of estimating cashflows and establishes some general principles that should be adhered to in all va]uation.The one overriding principle governing cashflow estimation is to match cashflows to discount rates equity cashflows to cost of equity,firm cashflow to cost of capital ,pretax cashflows to pretax rates,posttax cashiflows to poattax rates,nominal casliflows to nominal rates,and real cashflows to real rates. Chapter 4,?The Discounted Cash Flow Model----Estlination of Discount...