A Case Study Of Enterprise Value Evaluation Of M Company Based On Modified ARIMA Model

With the development of China's economy,the capital market has gradually matured,and activities such as mergers and acquisitions of capital have become more frequent.The smooth progress of these capital activities is inseparable from a fair and reasonable evaluation of corporate value.At this stage,the three evaluation methods in the mainstream,namely,the market method,the income method,the cost method,and the medium-income method,are widely used in enterprise value evaluation because they are most in line with the characteristics of enterprise value.However,the commonly used sales percentage method,etc.,will involve the subjective factors of many evaluators in the evaluation of enterprise value,resulting in the evaluation results not being objective,and the evaluation process is cumbersome,and it is necessary to collect a large amount of information,which is difficult to promote.Among the three elements of the income method,there are many indicators for determining the amount of income in each period,such as net profit and free cash flow.The free cash flow is determined to be the most suitable income item because it has few human factors and has a high correlation coefficient with the enterprise value.On the basis of this paper,the free cash flow of each period is regarded as a time series.The differential integrated moving average autoregressive model is used to analyze and predict the free cash flow.The biggest advantage of the time series analysis model is that all prediction results are directly based on historical data.There will be no subjective factors of the evaluator,so the evaluation results will be more objective.At the same time,it is more easy to establish the model,and the applicability is wider than some other methods.Based on the free cash flow of M Co.,Ltd.from 1998 to 2018,this paper finds that the free cash flow is not stable after the stability test,so it is smoothed,and then uses the autocorrelation function graph and partial autocorrelation.The function graph determines the parameter values of the differential integrated moving average autoregressive model,and combines the characteristics of the M company's food manufacturing enterprise to incorporate the inventory of the next free cash flow variable into the model,and through multiple fitting and comparison,The improved ARIMA(4,1,3)model of the free cash flow of M Co.,Ltd.was finalized.On this basis,this paper predicts the free cash flow of M Company in the next three phases,and calculates the enterprise value of M Co.,Ltd.as 806.2 billion yuan.The evaluation result proves the reliability of the ARIMA model.