Principal Component Regression Analysis In The Application Of Business Valuation

Business value determines if the activities of corporate such as mergers restructuring. stock transactions and corporate investment can be achieved. Business valuation is the primary access to enterprise value. So. Business valuation is important to the economic activities.In order to make more objective assessment of the results. it is necessary to use at least two approaches for business valuation. The main method'of business valuation is the asset based approach in practice. Market approach is rarely used, mainly due to it has omitted some important information, making the results unreasonable and less objective.This article discusses the use of principal component regression analysis method. assessed enterprise value of multivariate methods. The question of single multiples was solved. We establish a good regression equation. Through the example of copper industry we introduce how to use principal component regression analysis method to establish a good regression equation and get a better enterprise value.The method of principal component regression analysis make business valuation by Market Approach practice feasible.