Research On Valuation Of W Co.Ltd. Base On Residual Income Model

In the fragile global economic environment, the financing institutions generally assess the listed companies in the market approach. With the influence of the economic environment, if using this method, the value of the company will be underestimated. The Firm W is preparing to appear on the market. The board of directors and managers need to know the value of the firm W. Accordingly having a deeper understanding to the firm. Therefore, It is necessity to assess the firm W in a scientific and effective method.Firstly the thesis introduces the basic theory, advantages, limitations and applicability of common approaches to business valuation, especially for more of the residual income model overview. Subsequently, the thesis sketches out the W company in its own operating conditions, corporate culture and development strategy. And the thesis analysis the reason of choosing the residual income model for the business valuation of firm W. Then, integrating theory with practice, Used the residual income model theory to comprehensive evaluating the valuation of firm W. Include the following contents: at first, adjusted the residual income model. The secondly, analyzed the financial situation and operations of firm W from two aspects. Including the analyzing the financial statements in history and the financial ability of firm W(profitability, operation ability and debt paying ability). The thirdly, applied the residual income model to assess the enterprise value of the firm W. It is included forecasting the dominating financial indicators(operating income, the net interest rate of the main business, total assets turnover, return on assets and equity multiplier), calculating the equity capital cost and the enterprise value of the firm W. Finally, the thesis comparative analysis the concluded that the results of firm W’s valuation on the residual income model with the book value of firm W and market value assessment results. And used the method of sensitivity analysis analyzed the results of firm W’s valuation on the residual income model.This research of thesis mainly listed pricing to provide the reference for the firm W, at the same time for the operators, the residual income model advocated the importance to their own situation, emphasizes the valuable growth for the future, it is a good management idea guidance, can help enterprises to find their own strategic mode and potential points. At the same time for other auto parts enterprises and other industries enterprise value evaluation has certain reference significance.