Financial Times Handbook of Corporate Finance, 2nd Edition

13

VALUING COMPANIES

IntroductionThe two skillsValuation using net asset value (NAV)Income flow is the keyDividend valuation methodsHow do you estimate future growth?Price–earnings ratio (PER) modelValuation using cash flowValuing unquoted sharesUnusual companiesManagerial control changes the valuationConclusionNotes

Introduction

Managers must become acquainted with the main influences on the valuation of entire companies and how to value individual shares in companies. If they are to be given the responsibility of maximizing the wealth of shareholders managers need knowledge of the factors influencing that wealth, as reflected in the share price of their own company. Without this understanding they will be unable to determine the most important ...