Business Valuation Of Tianyao Corporation Based On Free Cash Flow

In the late 1980s, Chinese economy began transforming from the planned economy to a market economy. In order to adapt to the request of economy transforming period, asset evaluation industry of our country gradually developed based on drawing lessons from foreign theory and methods. In the background of Chinese economy rapidly developing and ongoing economic globalization, the transactions among Chinese enterprises have been more and more frequent, such as mergers and acquisitions, reorganization, share transfer, financing and so on. Business Valuation as a basis for pricing of a transaction has began to be concerned about.Recently, business valuation has become main content of evaluation industry of our country. The theory and methods has gained further application and development in practice, though the use and application of the business valuation of our country has been lots of defects like that Chinese capital market is not perfect, theory research cannot satisfy the demand for practices, the applicability of the methods should be researched. Meanwhile, not only is the Business Valuation a tool for assessing the value of the enterprises, but also have it become an approach for managing by values.On account of the needs as aforesaid, this thesis is to research the foreign classical theory and methods of business valuation, and analyze the applicability of the methods, especially the Free Cash Flow Model. It is to analyze the case of Tianyao Corporation.This thesis uses the scientific and standardized methods, whish display process of business valuation such as the use of formula, the choice of parameter, the sieve of data, the calculation process, the analysis of macro-environment and interior environment in enterprises, forecast and judgment, verification and inspection, and so on. At last, this thesis uses Economic Value Added Model to test the result. Furthermore, this thesis is to compare the result and stock price in order to certify the objectivity of the market price. This thesis uses an integrated process overall, and hope to be a reference for the researchers.