Enterprise Valuation Method Is A Comparative Study

With gradually globalization of economy and capital flow widely, firm cooperation, joint venture, merger enterprise restructure etc, all the activities are involved in business valuation. Enterprise finical objective has transferred from maximization of Profit to maximization of enterprise value, business valuation has become core issue of the enterprise management. Business valuation also called corporation valuation taking the enterprise as a whole, evaluates its value for exchanging in the future. It is abided by the Principle of maximization of enterprise value, business strategy selection, and asset appraisal will develop toward it.During the development of business valuation in our country, there is a situation in that the appraisal theory is behind the appraisal practice. In the practice, the replacement cost method dominates in business valuation and then it is verified by the income method, it is much different from the foreign country's appraisal practice in which the market method and the discounted cash flow method are a major approaches in business valuation. In our current market condition that the capital market is less developed and the relating economic and technologic terms are not Perfect, how to value a business enterprise objectively and fairly and be close to international appraisal theory gradually is a critical problem to be resolved.This thesis consists of five chapters:The first chapter, makes a general description of business valuation, at the same time, puts up the meaning and approach of enterprise valuation.The second, third and fourth chapter, introduce three main enterprise valuation approaches and methods: DCF (discounted cash flow) method, market multiplier method and adjusting the book value of the financial statements. These chapters are also the predominant part of this thesis.The fifth chapter focuses on the comparison research on the different valuation methods, sets forth the advantages and disadvantages of each method, at the same time, introduces RIM, EVA and DDM valuation methods.