An Application Research On Income Approach Evaluation Of The Seed Enterprise

Agriculture has been at the foundation position in the national economy.As the core factors of agricultural production,the seed has a special important position in the whole agriculture,and it is also the core of the whole agriculture.However,in China’s seed industry,there exist some problems like lower industry concentration,low proportion of commercialization and weaker breeding research and development capabilities.Due to the national support of seed enterprise merger and reorganization,seed industry resources integration,to optimize the allocation of resources,establishing seed companies with core competitiveness,strong international competitiveness and the integration of breeding,multiplying and promotion,most of the seed companies size the policy opportunity,and carry on the merger,acquisition and reorganization actively.These actions promote the prosperity of the industry and produce a series of economic activities.This puts forward new requirements for the seed industry enterprise value evaluation.Compared with the developed countries whose enterprise value evaluation has grown,enterprise value assessment in China is still in its infancy.There are lager deficiencies in many ways,especially for the income approach in enterprise value assessment in China which is still in the stage of theoretical research.Inner Mongolia ZF seed enterprise is selected as the target company in this paper to research the application of income approach in seed industry enterprise value assessment and to predict parameters,in order to make contributions to enterprise merger and reorganization activities of seed industry.Inner Mongolia ZF seed enterprise will be used as the case in this paper.Through the research of seed industry present situation and the advantages and disadvantages and the detailed introduction of the financial position,operating capability and profitability ofZF seed company,evaluation purpose and hypotheses are put forward and evaluation methods and evaluation model are determined combined with the situation of the target company and market conditions.Future earnings forecast is the core of this paper.It is start with the cumulative method which can calculate the average annual growth rate,and analysis the influence factors in the actual carefully and amend it and finally calculate the growth rate of future earnings.Other factors such as cost and period cost calculate the forecasts almost based on earnings forecasts.Through the above series of forecasting process,enterprise’s net cash flow is calculated and the net cash flow is capitalised by discount rate which is calculated by the capital asset pricing model and finally the enterprise value is concluded.Through the application of income approach in seed industry restructuring value confirmation,income method evaluation results were analyzed and the cause of value-added by the assess of income approach is interpreted and the main factors influencing the future cash flow are pointed out.Finally,the.problems of income approach application in the assessment of enterprise value and the operability in practice are shown in this paper.It aims to explain the application of income approach in seed industry enterprise value assessment and the operability in practice and lying the foundation of the widely use of income approach in the future with a certain practical significance.