A Study On The Applicability Of Enterprise Value Appraisal Method From The Perspective Of Life Cycle

With the development of our country’s economy marketization, capital market continues developing and improving. Activities of enterprise merger and acquisition occur frequently and parties’ demand of relevant for corporate evaluation keeps on increasing. Individual and institutional investors gradually shift from the pursuit of short-term interests goals to rational concerned about long-term development of the enterprise, and corporate evaluation is considered as an important role in the fundamental analysis. For modern enterprise manager, the target gradually transforms from the pursuit of profit maximization to the shareholder wealth maximization, which is measured by corporate evaluation. Therefore, the corporate valuation theory is very important at this stage. Value evaluation theories in UK, USA and other western developed countries has advanced and formed an entire system of knowledge. In China, due to the development later of capital market, the value evaluation system is not perfect enough. Domestic scholars of value evaluation research concentrated on the comparison of existing research in western theory, model improvement and the empirical testing of existing valuation method.The dissertation will pay attention to the enterprise life cycle perspective study and demonstrate on the applicability of valuation model under this perspective. Different valuation methods base on different assumptions and theories. The valuation method itself has no absolute advantages or disadvantages, but only appropriate or not. Corporations in different life cycle stages have different features of organization structure, operating and financial characteristics. Therefore, this article study valuation methods are applicable to the enterprises in different life cycle stages can make corporate valuation more accurate reflection of the true value of enterprises and this study help enterprises choose the method of valuation model for practice. In the aspect of theory, it is also helpful to a deeper understanding of various corporate valuation methods.The article discusses the topics according to theory study, comparison study and case study. Firstly, the author summarizes corporations’ life cycle and valuation measurement theory by demonstrating domestic and foreign current conditions. Secondly, the paper mentioned organization structure, operating and financial characteristics of enterprise in different stages of the life cycle and put forward the division method of enterprise life cycle. Thirdly, this article respectively introduced the cash flow discount method, relative multiplier method, real option valuation method and replacement cost method. There is also explanation of their valuation principle, model, and development with their respective strengths and limitations. Fourthly, the table is created to illustrate the application of different corporate valuation under the company life cycle. Finally, based on a specific enterprise case study, the author will take into account its life cycle, and use the proposed typical valuation method to evaluate its worth. The results will be compared with the company’s market value, which is aim to improve the availability of different valuation models in different stages of life cycle.