Business Valuation Selection Of Comparable Companies

Enterprise value assessment has become the hot topic in the asset appraisal industryfor a long time.At present,there are three commonly used methods for the enterprise valueassessment:cost approach,income approach and market approach.Due to the application ofthe market approach requires an efficient market environment,and now our country cannotmeet this standard,therefor,the market approach is not widely used.But the marketapproach with its simple,low cost and strong persuasive will be widely applied in theassessment of enterprise value in the future,Although,there are all kinds of complexproblems in the evaluation practice of the market method.For example,it is difficult toselect the comparable objects and value ratio in different valuation cases;it is difficult tocontrol problems in adjustment in the special matters.So study these technical problems forthe application of the market method in the evaluation of the enterprise value of ListingCorporation has very important function and significance.Iron and steel industry hasplayed a decisive role in the national economy status.In recent years,with the constantintroduction of related policies of China’s iron and steel industry,Iron and steel enterprisesrestructuring activities have become increasingly frequent,and diversified evaluationmethod of iron&steel enterprise value has become necessary trend of the development ofassets appraisal industry.This article studies on core issues in the marketapproach--difficult to select comparable objects;introduces the comparable companychoice theory at present market approach and used the iron and steel industry as acase,collects of10financial indicators in74iron and steel industry listing corporation inShanghai, Shenzhen two stock markets.We use principal component analysis method toclassify the iron and steel industry listing Corporation,to explore the classification of theiron and steel industry in listing corporations and to provide some useful suggestions andreference to choose comparable corporation used in the future market approach.