Study On Enterprise Value Evaluation Of Seasonal And Unprofitable Enterprises

Forty years ago, three articles by F. Modiglianli and Merton H. Miller establish the base of enterprise value theory. They pushed the theory of capital budget and enterprise value evaluation which has stagnated for several decades to a climax, declared the practical phases of the enterprise value evaluation theory and technique and became the base of modern enterprise value evaluation theory.But the theory doesn't apply to all enterprises, this paper aims at the often used but ignored issues in enterprise value evaluation ,studies the forecasts of achievements of seasonal enterprise, the unprofitable enterprise value evaluation and the calculation of discount rate etc and puts forward the practical value evaluation model applies to the seasonal enterprises.In the first part, it studies the theoretical base of the enterprise value evaluation by comparison, makes some comparison between the research actuality of China and other countries and point out that the enterprise value evaluation doesn't apply to those special enterprises such as seasonal enterprises and unprofitable enterprises etc.The second part includes chapter 2 and chapter 3, it mainly discusses about two issues. Firstly it gives some ways to settle the enterprise value evaluation of unprofitable enterprises and points out adopt one of them according to different cases after analyzing the unprofitable reason of the enterprises; Secondly it puts forward the improved more practical enterprise value evaluation model according to seasonal enterprisesThe discount rate is an important parameter in enterprise value evaluation so this paper makes a special discussion on it in chapter 3. The definition of current discount rate doesn't form an accepted standard and it affects much by subjective factors. The paper argues that the discount rate is the integrated capital cost of all capital sources considering all kinds of risks and is the whole discount rate. Due to the trends of delay of short-term liabilities and current liabilities visibility, the calculation of the discount rate should base on WACC model and consider the affects of the adjustments of tax factor, the change of the capital structure, the liquidity risk and the dynamic variation of capital. The whole discount rate is confirmed after quantification. On the basis of integrate capital cost it describes more detailed individual capital cost and puts forward the improved discount rate model.The paper makes a conclusion in the last part and points out that enterprise has limited life period according to the enterprise life period theory. The enterprise value can't be evaluated by way of forever-existed or staged. The lifeand evaluation period should be reasonably forecasted. The paper argues analyzing individually to different enterprises and reasonably forecasting accordingly.Due to the development of the theory of enterprise value evaluation and the rush of new evaluation theories, the paper argues that the application of commodity option doesn't come to practical period now, but it will push the development of evaluation theory again and it is the research aspects in the end.