A Case Study Of Enterprise Value Evaluation Of TX Company Based On Improved Binary Tree Model

In recent years, investors have been keen to invest in technological innovation-based enterprises, strategic emerging enterprises. And the government is also actively encouraging the development of these enterprises. But compared to stable mature manufacturing enterprises, these enterprises set up not long and are still unstable in an uncertain environment. These factors make it difficult for investors to assess their true value accurately. Because of some inherent limitations, the traditional assessment methods are not very good to adapt to the nature of such enterprises. So the choice of appropriate assessment methods and improvement of the assessment method to assess the value of the enterprise more fair has become a major problem.This paper chooses the representative company TX as a case study of enterprise value evaluation. TX who belongs to emerging industry called "photovoltaic agriculture"is a technological innovation-based enterprise. And TX has built a leading position within the industry. In order to evaluate the enterprise value of TX, the first part of this paper gives a brief analysis of its basic situation and industry development, and introduces the evaluation purpose, base date, basic assumptions and evaluation scope of the evaluation case. The second part analyses the evaluation method of the selection method firstly, and use the binary tree option pricing model to consider the uncertainty of the enterprise finally.Because the related research on the application of the binary tree model in the enterprise value evaluation is lacking and there are some shortcomings in the current research. In this paper, the use of the binary tree model and the parameter of liquidation value in this model are improved based on the example of TX. First of all, technological innovation-based enterprises like TX are often affected by the government policy, so the use of binary tree model should vary in response to the actual situation and take the change in government subsidies, government policy into consideration. This paper summarizes and analyzes the changes in the price of photovoltaic power generation over the past few years in order to predict the future price of electricity, which in turn changes the cash flow of TX predicted by the original model. Secondly, for the parameter of liquidation value in this model, they usually put the owner's equity as the base period of liquidation value. And this approach is not reasonable. Because the liquidation value is significantly different from book value or bankruptcy value under the condition of well-organized liquidation. In practice appraisers often use liquidation price method to evaluate the liquidation value, but it is not appropriate to use this method to evaluate the liquidation value in the binary tree model. In order to make a more realistic assessment of well-organized liquidation in the open market, this article uses different methods of assessment based on the different types of internal assets to reappraise the liquidation value of TX. And then people can make a more realistic and reasonable assessment by the use of improved binary tree model. Hoping to make a new idea of assessment and provide a new way for the other scholars to continue the research,this paper improves the evaluation method of binary tree model by the example of TX to make the enterprise assessment more real and fair.