13.3. Basic Concepts of Company Valuation
Before analyzing the three main techniques used to calculate equity value, it is necessary to define the basic financial and economic elements of a company: the balance sheet, the profits and losses statement, the financial statement, and the cost of capital.
13.3.1. The balance sheet
The first element is the balance sheet as seen in Figure 13.1.
Figure 13.1. Balance sheet.
The left side of the balance sheet includes all of the company assets divided into:
- Current assets — Account receivables, inventory, and liquid assets.
- Fixed assets — Material investment realized during the life of the company ...
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