The Study On Applicability Of Enterprise Evaluation Theory In China

With the quickening of the economic globalization process, capital is flowing more extensive and faster, and the restructure activity is frequent increasingly, such as enterprise's privatization, joint venture, merger and acquisition etc. The restructure activity concerns enterprise evaluation, hence enterprise evaluation plays an important role in restructure activity. However, the research of enterprise evaluation theory and method in our country far lags behind the west. Up to date, the enterprise evaluation which illustrated in financial teaching material of our country mainly rely on the fact that come from the western theory such as discounted cash flow method (DCF), market method and real option method, etc. and our country practice mainly adopts traditional financial evaluation method based on historical data, other more scientific methods are used little. At this point, this thesis explains the defect and advantage of enterprise evaluation method, and explores the applicability of various kinds of methods in our country.This thesis divides three parts.First part is the foundation of this thesis (chapter 1, 2). This part expounds the essence of enterprise value with economics and finance. The conclusion is enterprise value refers to the whole value of enterprises under the condition of realistic market from essence, and it is formed by the future profits (cash flow, utility, etc.) of enterprise, and it is made up of earning capacity value and uncertainty value. Secondly, this part summarizes the development of western enterprise evaluation theory and our country enterprise current situation.Second part is a key content of this thesis (chapter 3,4,5,6). This part of contents have explained in detail that the characters and difficult problems of method of adjusting book value method, market method, discounted cash flow method and real option method in our country. Firstly from the perspective of enterprise valuation theory and econometric models, adjusting book value, discounted cash flow, marketand real option method are all favorable for enterprise valuation theory. And the differences of evaluation purpose, evaluation type, evaluation hypothesis and restrict actors determine the level of degree in which different evaluation method are suitable. With the national stock market's maturity and increasing standardization of list companies' information disclosure, DCF, market method and real option method will be adopted increasingly.When adjusting book value method is adopted, the reality that it not base on the whole enterprise but base on the history cost of single-item assets will always result in big deviation between evaluation result and market value of enterprise. Hence, the application range of adjusting book value method should be reduced gradually. The low level development of capital market of our country causes the market method to be not provided with enough qualification to be used widespread. But at the active part market the market method should be used conditionally. The choice of comparable company should regard the enterprise of the trade as the norm and extend the data source, pay attention to the dependability test of valuation rate, make use of various ratios to match with etc. mutually. The biggest limitation of DCF is that it neglects the "uncertainty" of enterprise and the value of opportunity that the "uncertainty" produces. Though it has limitations, but it is perfect theoretically. When the DCF method is adopted, it should adopt relevant discount model that complies with enterprise's development. Cash flow prediction should base on sale income prediction, and the latter takes analysis on future development potentiality of enterprises management as prerequisite. Discount rate should not be less than no-risk rate of returns. There are various restrictions, when the real option method is applicable. Option valuation model posses many suppose and premise. And the appraisers' quality is low. All these limit the application of this method in our country.The third part is the conclusion of this text and the subject that needs studying further. The third part is the conclusions of this thesis and the problems that need further study (chapter 7). The conclusions of this thesis is as follows: Adjusting book value method is the most extensive method in our country, but because of its theory flaw, its application should be confined; Because capital market of our country isplaced in the lower level, the market method is not provided with enough qualification to be used widespread. But it probably can be used in active part market; Although DCF posses some localization to some extent, but it is the most scientific in all method. And it is applicable to the enterprise that is long-term stable. Because real option method takes uncertainty value into accountant that DCF takes no account, so it has tremendous room to develop. And there are some obstacles when real option method be used. The problems that need further study as follows: How to create countermeasures and how to improve enterprise evaluation methods that must satisfy the demand of our country's evaluation practice are the problems that need morefurther study.