Chapter 10: Valuation
After understanding the three-statement model and ratio analysis in Chapter 9, Ratio Analysis, we can now proceed with the valuation of the company using the absolute method (Discounted Cash Flow (DCF)) and the relative method (comparatives).
Whatever the reason for establishing and running a company, you will at some stage want to know the value of the business. This could be to identify weaknesses, determine whether the business is growing, stagnant, or deteriorating, apply for a loan, attract investors, establish a reference point as a platform for driving future growth, or prepare for divesting from the company. There are several methods of valuation, but the three main methods will be discussed in this chapter.
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