16. Perfect competition as an ideal market model and a method for analyzing real market structures.
Clean (perfect) Competition is a competition that occurs on the market, where a very large number of firms producing standard, homogeneous goods are interacting. Under these conditions, any firm may enter the market, it does not control the prices.
Thus, the market of clean competition (or perfect) is the one on which the same price is established on the same product at the same time, for which they are necessary:
unlimited number of participants in economic relations and free competition between them;
absolutely free access to any economic activities of all members of society;
absolute mobility of production factors; Unlimited freedom of capital movement;
absolute market awareness about the rate of profit, demand, proposal, etc. (the implementation of the principle of rational behavior of market entities (optimization of individual welfare as a result of income growth) is impossible without complete information);
the absolute homogeneity of the goods of the same name (lack of brands, etc.);
the presence of a situation when no competition participant is able to have a direct impact on the solution of another non-economic methods;
spontaneous price setting during free competition;
lack of monopoly (the presence of one manufacturer), monoppsies (the presence of one buyer) and state non-interference in the functioning of the market.
17. Monopoly: the concept, conditions of existence, the factors of the monopoly power. Types of monopolies.
Monopoly - This is a branch producing products that do not have substitutes. Therefore, a monopolist firm dictates the price of its products.
Monopoly acts in the following forms: 1) closed – protected from competition legally: copyright, patent; 2) open - does not have special protection from competition (firms that came to the market with new products); 3) natural - Exploiting unique natural resources (power grid, water supply companies, gas enterprises).
Antimonopoly policy in a narrow sense It provides for the establishment of legislative restrictions (including complete prohibitions) concerning various types of monopolistic behavior of market entities, control of mergers and acquisitions of firms, pricing policy.
Modern antimonopoly legislation has two principal directions: - control over prices;
- Control over mergers companies.
Antimonopoly legislation primarily prohibits agreements at prices. Illegal is any collusion between firms in order to establish prices. The law is also pursued by the dumping sales practice, when the firm intentionally sets lower prices in order to displace competitors from the industry.
18. Oligopoly in a market economy.
For oligopoly, three features are characteristic:
- There are two or more competing firms in the industry, so the industry is not monopolized; - the demand curve of each company has a falling nature, so the industry does not apply to free competition; - In the industry there are at least one major firm, any action of which causes a response of competitors, so it cannot be considered that monopolistic competition is observed in the industry.
The main difference between the completely competitive market from oligopolistic consists in the peculiarities of price changes. If the competitive market price changes continuously depending on the oscillations of supply and demand, then the price changes are not as often as often, usually through some time intervals and a significant amount. Such "immobility" of prices is usually found when firms face cyclical and seasonal demand changes.
Monopolistic competition is such a market situation in which a relatively large number of small manufacturers offer similar, but not identical products
From the very name it follows that the monopolistic competition is characterized by the feature of both monopolies and perfect competition
Started the study of monopolistic competition. Edward X. Chamberlain from. Harvard University. In his book "Monopolistic competition", which came out in 1933, was argued that modern economies Almost all markets are imperfectly competitive. Regardless of him, also in 1933,. Joan. Robinson from. The University of Cambridge published a book "Economy of imperfect competition", in which the same moments enlightened and developed the modern theory of monopolistic behavior of the alternate band.
For the market with monopolistic competition, the following is true:
1. The product of each company trading on the market is an imperfect substitute for the goods sold other firms
The product of each seller has exceptional qualities or characteristics, thanks to which buyers choose its goods. Buyers will be ready to pay a high price, such as boots, if they believe that they are more comfortable than those made by another manufacturer. Differentiation of goods means that the object that is sold on the market is not standardized. Differentiation can occur due to valid qualitative differences between products or due to differences that are observed in advertising, prestige of trading brand.
2. There is a relatively large number of sellers on the market, each of which satisfies a small proportion of market demand for the product, which implements the company and its rivals
With monopolistic competition, as a typical case, the company accounts for from 12 to 10% of sales on the market during the year
3. Sellers on the market are not considered with the reaction of their rivals when they set the price of their products or when the landmark relative to the sale volume is chosen
This feature is a consequence of work on a large number of sellers in the market with monopolistic competition. For example, if a separate boot producer is to sell more product, reduces its price by 20% for a couple of shoes, then it is likely that its sales increase will occur at many, not multiple sellers. As a result, it is unlikely that some kind of separate competitor is experiencing quite large losses of its share in the market due to a decrease in the sale price by any other company. So, competitors have no reason to respond to such a change in their policies, since the decision of the first firm to change the price will not significantly affect their ability to receive income.
4. Rinitis has conditions for free entry and exit
With monopolistic competition, it is easy to establish a new company or leave the market. Favorable conjuncture on the market with monopolistic competition attracts new sellers. However, the entry into the market is not a light mark light, as in the case of perfect competition, since new vendors often experience difficulties with new trademarks for buyers and services. Already existing firms with a stable reputation may be kept. Hishate its advantage over new manufacturers. Monopolistic competition is similar to the situation of monopoly, since firms have the ability to control the price of their goods. It is similar to the perfect competition, since each product is sold by many firms, and there is free entry and vigifiіd on the market.
Oligopoly
Oligopoly is a market structure characterized by a very small number of sellers associated with mutual addiction, and the emergence of new sellers is difficult or impossible
Oligopolistic markets have the following features:
1. Only a few firms cover the entire market. The product that they produce can be both homogeneous or standardized (aluminum, zinc, copper, steel, cement, technical alcohol) and differentiated ((cars, cigarettes, household appliances, beer, washing agents, carpets).
2. Some firms in the oligopolistic industry have large market shareholders. Consequently, such firms on the market are able to affect the price of goods.
3 firms in the oligopolistic industry are aware of their interdependence. Sellers always take into account the reaction of their competitors, when prices, landmarks in terms of sales, the amount of advertising you are hatch, etc. The reaction that individual sellers are waiting for their rivals affects the equilibrium on oligopolistic markets.
There are many reasons for the existence of oligopoly. One of them is the economy due to the growth of production. In some industries it is impossible to achieve low costs, while the company occupies a significant percentage of the market. The consequence of this is the trend of firms to reduce their sizer.
The second cause of the existence of an oligopoly - the presence of other barriers to entering the market of other firms (possession of patents, control over strategic raw materials, advertising costs)
To be in an oligopoly position, it is not necessary to be a major firm. If there are two similar stores in a limited economic space, they are also oligololistas. The fact that they are small do not affect the Sit Tuitsia.
About the oligopolistic structure of sectoral markets is evidenced by Table 2
Oligopolistic markets can be classified according to various
Table 2. Four firms share indicators for highly concentrated processing industries. USA
criteria. If the firms produce a homogeneous product (cement, copper), then industry Market Called purely oligopolistic. If the firms produce a differentiated product (cars, cigarettes), the Event industry is called differentially oligopolistic. Oligopoly can also be divided into those that have arisen as a result of secret agreements, and on those that are valid.
Real and perfect market structures
The market structures considered above can be divided into two groups: real and ideal. The real structures include monopolistic competition and oligopoly, to the ideal - perfect competition and the pure monopoly. Oligopoly and monopolistic competition describe many really existing markets. In oligopolistic structures include, for example, television, production of cars, cigarettes; to monopo sheets and competitive - manufacture of clothes, drugs, household electrical engineering, provision banking services population, publication of magazines and newspaper.
Unlike monopolistic competition and oligopoly, perfect competition and pure monopoly do not describe any real-life markets, but represent the ideal types of market structures. Of course, the term "ideal market structures" does not mean that these structures are good, and the fact that they exist as abstract go to іdeya.
In ideal market structures, markets really exist, can only approach. For example, the coming coming competing are some farms of agricultural products (wheat, corn), as well as some financial markets are also difficult to find the markets of a clean monopoly. Even the firms that occupy a monopoly-dominant position on the market, almost always have one or two small competitors. In addition, some rarely, any products are unique so much that it does not have a substitute at all. So, ideal market structures in the world practically do not exist.
Why then analyze the theoretical model of perfect competition and pure monopoly?
Firstly, the analysis of ideal market structures discloses how resources would be registered and the price would be established if there were no market imperfections - product differentiation, not mobility of those resources, poor market knowledge.
Secondly, the analysis of ideal structures shows the path to the most efficient placement of resources under certain conditions or restrictions.
Thirdly, the analysis of ideal structures helps us explore such an economic system in which the movement of goods, services and resources is unhindered
Fourthly, the analysis of ideal market structures allows you to build accurate models that demonstrate all alternatives regarding the volume of output and price levels, and therefore, contribute to maximizing the profits. Tkiv firms.
. LITERATURE
1. Pinkyk. R,. Rubinfeldd. Microeconomics-Kiev:. Basics, 1996 -. From 322-325,386-387,404-07
2. McConnell. TO,. BR. C. Analytical savings. Principles, problems and politics. H 2. Microeconomics-Lviv:. Education, 1997-since 224-304
3. Yastremian. ABOUT,. Gritsenko. O. Basics of Micro-Miki. Textbook-Kiev:. Knowledge, 1998 -. From 238-239, 460-464,487-489,498
4. Economic theory: macro and microeconomics. Ed 3. Vatamaneuka and. S. Panchishin-Lviv:. INTERKO, 1998-C 642-648
5. Fisher. FROM,. Dornbush. R,. Shmalenzi. R. Economy-M:. A business. LTD, 1995 - from 156-157, 192-194,218-228
6. Krupko. M /,. Ostrich. FULL NAME,. Reverchuk. S. K. Basov economic theory: Exercises and tasks Lviv:. Dialogue, 1997 -. From 64-70
7. Krupko. M. I,. Ostrich. P /,. Reverchuk. S. K. Basics of the theory of economics -. M .:. Dialogue, 1997 -. From 207-221
The activities of the modern enterprise, firms in the process of trade, when the basis of the adoption of economic solutions is the requirements of the market, real requests and needs of buyers in products and services and production and sales capabilities of this enterprise, firm. There are more than 200 marketing definitions, many of which contain an attempt to give it a comprehensive characteristic. For example, the American Marketing Association (AMA) adheres to such a position "Marketing is a process of planning and managing products and services, pricing policies, promoting goods to buyers and sales, so that the variety of benefits achieved in such a way led to the satisfaction of the needs of both individuals, organizations and societies in
Real Product Market 317
R 154 Real Product Market - 317
As soon as real market mechanisms earn, real competition will arise on any other market, managers of enterprises will necessarily need information about the cost of specific types of products and activities, the possibility and need to share costs for direct and indirect, counting profitability and other managerial operations will occur.
Consider Fig. 18-15, which presents a graph of aggregate savings (proposal of loan capital) together with a graph of total investments (demand for loan capital) in one coordinate plane. They intersect at a point where the percentage rate is equal to g °. At this rate of interest, the offer of loan capital equals to the demand for it. In other words, the expected savings is equal to the expected level of investment. With a real percentage rate, the capital market is in equilibrium. The real goods market is also in a state of equilibrium at a given interest rate, since the equality of savings and investment means that all leaks from the stream of real income (savings) are re-poured into this stream in the form of investments, i.e. all part of the income that saves Households are spent by investment firms, when the interest rate is equal to G - therefore, with this real interest rate, households and firms buy all goods and services produced with complete employment.
Consistently expanding the securities market, we could now impose all the work on the organization of buying and selling on banks of Russia. Help in this business can also be provided on the initiative of enterprises special holding companies, the main function of which will be finance management. By the way, it is important that the company and enterprises themselves do not participate abroad, their interests always represent either a bank or a holding or brokerage company, which are members of the Exchange. Not everyone can become such a member, their number is regulated, and the reputation should be flawless. In addition, membership costs money. On the New York Stock Exchange, the price of a place ranges from 450 to 6000 thousand dollars, and the number of members is almost unchanged - 1469. Exchange Futures - the modern form of the organization of commodity exchanges. On the futures exchange trade is carried out exclusively by futures contracts. Appeared in the second half of the XIX century. The emergence and development of B. F. It is due to the fact that it allowed to reduce the risk of adverse vibrations of capital treatment prices, reduce the amount of reserve capital required in the case of unfavorable conjuncture, speed up the return in the cash form of the advanced capital, should reduce trade lending, reduce the costs of circulation. Trade on B. F. Compared to the Exchange of Real Goods, it is preferably a fictitious nature of transactions (only 1-2% of transactions are completed by the supply of goods, and the rest - paid difference in prices) mainly indirect communication with the real goods market through hedging. Full unification of all contract conditions, except prices and terms Deliveries of dischanterness of transactions, as they are regulated not between a separate buyer and the seller, but between them and the settlement chamber. Transactions on futures exchanges are concluded with contracts both on goods and currencies, stock indices, interest rates, etc. Operations on all B. F. The world exceeds 10 trillion. Doll.
An effective methodology for obtaining information was a survey of managers of the sales departments of branches located on the most important European RS markets, including the heads of the Sales Department, working in the head office in Ruang. The main purpose of the survey was a comparison of assessments of competitors' participation in the mechanical processing sector obtained on the basis of a marketing database, with their own estimates arising from experience in this market. Often, executives have information obtained from various informal sources. During each visit to consultants, issues related to the qualitative aspects of the market and its development were discussed to the heads of sales departments and its development during last year Bankruptcies of competitors, new market participants, real or potential price wars, stagnation in the local economy, etc.
The real goods market - the market on which the real product is trade in contrast to trade in futures contracts. In the real goods market there are transactions with a warehouse, with immediate delivery and delivery for a term.
Thus, theoretically, it does not matter which of the second differences we use. The resulting estimates are equivalent. However, another thing - real market. Real options options may not satisfy the basic properties of probabilistic distributions. Three factors can be defining here. Firstly, it's just the game of the case of second, more complex risk relationships with the third-time tool yield is not equal to zero.
Fed - Space detachment. The Fed can act as a space detachment. In any case, she responds with three main criteria possesses the authorities, surrounded by mystery and has an office in New York. Some observers even consider the Fed to control the stock market - real or symbolic actions using warning measures or by inaction. However, sensible people understand how ridiculous - the market is obeying only solar activity and follows solar spots.
Manipulate trading transactions with payment paid is much more difficult than futures for this much more capital is needed (due to lack of leverage) and more time. Therefore, profits on the investment capital are less if attempts are made to manage the cash market. In addition, the cash position is less liquid compared to futures. As a result, the manipulation of real financial instruments is rarely undertaken and rarely brings success.
An important feature of the classic macroeconomic model is the principle of money neutrality. It suggests the absence of any impact of the money supply for real production. Money in the classic model is needed by market agents only for servicing transactions, i.e., to perform a purely technical function in the process of purchase-sales. On this basis, the concept of classical dichotomy was formulated by classics - the functioning of two parallel markets for real and monetary, the balance between which is maintained through automatic stabilizers. Hence the conclusion was concluded about the inexpediency of state intervention in economic life.
Significant. Through the system regulation of the real fund market.
The main indicator of the real fund market
It is clear that in order to achieve a balanced state of the leasing procedure, it is necessary to have sufficiently developed associated sectors - banking, the real fund market (including and equipment) and insurance. In addition, the approval will be more correct, according to which the stages (stage) of these markets should be compared. As can be seen from the previously proposed characteristics, not only the incomparable phases of the development of the banking, real and insurance market, but also the lack of a single regulatory policy aimed at balanced operation and development (see Figure 2.13).
Joint-stock (Corporate) Financing Commercial Banks Institutional Investors Corporation Organization Corporate Practice of Investment Use of the Corporation (Organization) Intelligent Investment Investment Work only in the securities market, and not in the real program market high level of investor risk
For example, in the market cellular communication There is an equal struggle of two sides. However, in the presence of a state company that will dominate the industry and will continue to receive subsidies or will have unfair government benefits, innovation supported by venture capital will not appear. Government facilities can be aimed at supporting venture capital, if Mcarrow can be resolved. In addition, meaningful financial reports on a regular basis will be useful. Due to the wrong accounting wiring Some small firms will not be able to enter the stock market. The real alteration of accounting is a serious burden for the company (until it reaches a certain size). Firms cannot afford to return and redo all their reports. A financial report, which is really able to disclose information, changes the matter, since the investor actually appears confidence in the company.
In order to streamline this spontaneous practice, the USSR Sovmint in October 1988 adopted a decree on the release of enterprises and organizations of securities, which legalized the status of the so-called shares of a labor collective intended for employees of teams and shares of enterprises and organizations - to accommodate among legal entities. Governmental decisions were also practiced to transfer the property of individual enterprises, such as KAMAZ JSC, Permavia JSC, etc. This was another step towards the revival of the market for real equity securities. The process of the formation of a joint-stock ownership in general terms was completed with the adoption of the Soviet USSR in the mid-1990 of the well-known decree on the approval of the Regulation on joint-stock companies and limited liability companies and the provisions on securities. A little more than a year later in the USSR, about 1.5 thousand AOs and Ltd., the total authorized capital of which in the current price scale exceeded 25 million rubles.
Charitable organizations (such as Oxfam) have purchased coffee in small producers for a long time, recycled it and sold through their own stores at different parts of the country. Since the distribution through the stores of a charity organization covered only a small market, actually such a "AMPAIGN" type coffee was intended for very persistent adherents ready for good deeds to sacrifice
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Introduction
Chapter 1 Theoretical basis Business estimates
Chapter 2 Approaches and Methods used to assess the business
2.1 Profitable approach to business assessment
2.2 Comparative approach to the valuation of the enterprise (business)
2.3 cost approach to business evaluation
Chapter 3 Evaluation of the value of the enterprise (business) ZAO Novorossiysk Stao
3.1 general characteristics Enterprises of ZAO Novorossiysk Stoa
3.2 Analysis of the financial and economic condition of the enterprise ZAO Novorossiysk Stao
3.3 cost approach to the assessment of the business of ZAO Novorossiysk Stao
3.4 Profitable approach to the valuation of the enterprise (business)
Conclusion
List of used literature and information
Introduction
Currently, the assessment of enterprises is especially important. The assessment of the enterprise makes it possible to improve management on it, helps to develop a strategy for the development of the enterprise. In order to answer the question: investments in which business will bring the greatest return, you must first of all assess their assets and future income from business.
The process of assessing enterprises gives a realistic idea of \u200b\u200bhow the company will work in the future. This is valuable to everyone who is connected with it: for owners, managers, workers, consumers, suppliers, bankers, insurance workers and tax ServicesInvestors.
Under the market value of the current enterprise means the most likely price in which this enterprise can be sold on the open market in the context of competition, when the parties of the transaction act intelligently, having all the necessary information, and the price of the transaction does not reflect any emergency circumstances, that is, when:
One part of the transaction is not obliged to alienate the assessment object, and the other party is not obliged to take execution;
The parties of the transaction are well aware of the subject of the transaction and act in their own interests;
The assessment object is presented in the open market in the form of a public offer;
The price of the transaction is a reasonable remuneration for the object of assessment and coercion to the transaction for the parties to the transaction from which side was not;
Payment for the assessment object is expressed in cash.
Thus, the conclusion about the real market value is a weighted assumption of the level of price, according to which property can move from hand to hand by mutual agreement of the parties.
When calculating the value of the enterprise as a valid principle of the best and most efficient use, it was not taken into account. In this case, an existing profile of the company's use is taken into account.
In this work, the market value of the estimated enterprise is defined in rubles.
In the process of performing the task was used Retrospective information O. financial condition and the activities of the enterprise ZAO Novorossiysk Stoa in the period from January 1, 1999 to January 1, 2002, namely:
Financial documents obtained at the enterprise (balance sheets, forms No. 1, №2, etc.);
Interviews of representatives of the enterprise management CJSC Novorossiysk Stoa,
Information about the services market from Russian sources;
General economic information from periodicals and specialized analytical reviews.
Currently, the regulation of assessment activities in Russia is determined federal law №135-ФЗ dated July 29, 1998 "On appraisal activities in Russian Federation" This law has established that everyone else regulations In the field of appraisal activities will be taken in accordance with this legislation, as well as on the basis of international treaties.
This law is governed by relations in the field of appraisal activities in terms of assessing objects belonging to both the Russian Federation, its subjects and municipalities and legal entities and individuals.
Currently, Government Decree No. 519 dated July 6, 2002, "Evaluation Standards, Mandatory Application Standards" was approved.
There are also a number of other standards recommended for use. These are international assessment standards developed by the International Committee for Standardizing Property Evaluation (IVSC) MSO1-4 adopted in 1994, as well as approved European evaluation standards.
The assessment was carried out taking into account all limiting conditions and prerequisites imposed by the terms of the task and entered on their own. This rating It can be used by depositors of the enterprise CJSC Novorossiysk Stoa in negotiations to achieve mutually beneficial agreements.
Chapter 1 Theoretical Basics of Business Evaluation
The transition of our country to the market economy, the process of privatization and incorporation leads to the fact that enterprises from state owned Transfer to private (individual, joint-stock). Now you can buy a stake in the company and become its owner. The country began the process of buying and selling bankrupt enterprises. The owner - has the right to sell, lay, insure his property. Thus, an enterprise as a property, i.e. The company's own capital acquires the properties of goods. At the same time, the company as a product has specific characteristics and as utility, and as cost.
Let's try to consider these properties more detail.
First of all, as every product, the company must have utility for the buyer, i.e. Consumer cost. The complexity of the goods itself is an enterprise, the complexity of its reproduction purposes, creates features and considerable cost. First of all, the company must comply with the needs of the buyer, the goals of future consumption.
As with any other product, the usefulness of the enterprise is carried out in use or consumption. Consequently, if the company does not work, does not bring an income to the owner, it loses its utility for the owner and is subject to sale. But this company becomes a commodity only if someone else sees new ways to use it, new opportunities to bring revenues. Over time, the forms of use of this product may change, it begins to generate income to the buyer, and, therefore, again gains utility. Today, this company satisfies the public needs, tomorrow it can be completely or partly submitted to another similar product.
The basis of the usefulness of the enterprise is the ability to reproduce not only on an old basis, but also become a base for the formation of another specific economic System (the use of land, material and real factors of production, labor force, etc.); The ability to create a product having a sustainable consumer, to better improve its activities and generate income.
All of the above properties of the enterprise as a product, as a purchase and sale facility, not always seen and not used by its owner can be the basis of a new consumer value for a buyer's entrepreneur, a motive for the purchase of this enterprise.
Each enterprise as a purchase and sale object should have not only the utility, but also a certain amount of value as the material basis of its price. Moreover, in this case, the basis of the public assessment is the utmost utility of the goods.
A certain work was spent on creating an enterprise. The reproduction of a similar company also requires the costs of objectively - due to the amount and quality of labor. Labor costs for the creation of an enterprise with similar utility at the average social conditions determine its value.
The usefulness of the enterprise determines the price from the demand, and the cost of reproduction of a similar enterprise dictates the price from the supply. As a result of the interaction of these forces, a market price is formed.
Thus, the enterprise in a market economy meets the needs of the owner in future profits, certain costs are spent on its production and it may be a sale facility, that is, has all the signs of goods. At the same time, as already noted - this is a product of a special kind. Let us dwell on some features of this product.
First, the company is an investment product, that is, the goods, the investment in which is carried out with the goal of returning in the future. Costs and revenues are disconnected in time. Moreover, the size of the expected profit is unknown, is probabilistic, so the investor has to take into account the risk of possible failure. If future revenues, taking into account the time of their preparation, there are fewer costs for the purchase of an investment product, it loses its investment attractiveness. Thus, the current cost of future revenues that the owner can receive from the enterprise is the upper limit of the market price of own capital of the enterprise from the buyer.
Secondly, the company is a system, but it can be sold as the entire system as a whole and the individual subsystems and even elements. In this case, the connection of the enterprise with its own specific capital is destroyed: its elements become the basis for the formation of other, high-quality new capital. In fact, the company is not the enterprise itself, but its separate components.
Thirdly, the need for this product-enterprise depends on the processes that occur within the goods itself and in the external environment. Moreover, on the one hand, the instability in society can lead an enterprise to instability, on the other hand, their instability leads to a further increase in instability and enterprise itself, and society. From this there is a new feature of the enterprise as a product - the need for regulation of purchase - sales.
Fourth, taking into account the special importance of the sustainability of enterprises for stability in society, the participation of the state in regulating conditions, the mechanism of the processes of the purchase and sale of enterprises, participation state Structures In the formation of market prices for enterprises, in their assessment.
First of all, we define what an estimate is generally.
From the point of view of external manifestation, the assessment acts as a typical subjective attitude. However, it would be erroneous to consider this visibility as the essence of the concept of evaluation.
The depth bases of the assessment of enterprises should be output from the relations arising between people in the production process. Estimated judgments are a subjective form of reflection of objective reality, and therefore these judgments are objective of content.
So, of course, the estimate is a subjective opinion, but it is based on an objective reality.
Evaluation is made on a specific date, i.e. It is determined in time, and in this regard is the concept of statics. However, the assessment of the enterprise depends not only on its position, but also on the position in the past and the future, therefore the assessment is simultaneously the concept is dynamic.
Another feature of the assessment is that the estimated relationship is always manifested in the form of a comparison, which is based on a certain norm.
Under the transition to a market economy, the assessment of enterprises is particularly important. Creating a new economic mechanism requires solving a whole complex of very complex and vital tasks, among which it is possible to distinguish the following: improving the economy due to removal of patients from its body through the mechanism of bankruptcy and rehabilitation, through the mechanism of transferring enterprises to specific owners who take on the whole risk For the fate of the enterprise. It seems very important, the fact that the process of assessing the enterprise allows not to simply determine the corresponding market value of its own capital, but may contribute to the transformation of the enterprise, prepare it for the struggle for survival in the competitive market and help the new market system to conquer public support. In addition, the assessment of the enterprise allows you to improve control on it. The evaluation process is the basis for the development of an enterprise strategy. It reveals alternative approaches to the management of them, and allows you to determine which of the approaches to the owner will provide the maximum market value of its own capital, which is one of the most important goals of enterprise management in a market economy.
The need for evaluation arises and when choosing investment solutions. In order to answer the question: investments in which business will bring the greatest return, you must first assess their assets and future income from business.
One of the reasons for the need to evaluate is the purchase and sale of the entire enterprise or its part. This may be in a situation where the business owner wants to sell part of its assets or in case of conflict between members of the partnership, when one of the members intends to sell its part. Often, there is often a market value in a market economy to sign a sales contract between partners, for example, when the owners agree on the future about what their shares will be in case of termination of an agreement or death.
Market mechanism unthinkable without market development valuable papersAnd this requires evaluation of enterprises. In particular, the need for evaluation is called by the need to determine the price of a certain package of shares.
The need for evaluation arises and in connection with the expansion of the scope of mortgage lending. In this case, it is required due to the fact that the value of the value of assets accounting reporting May differ sharply from their market value.
An increase in risk, characteristic of a market economy, leads to further development of insurance, in the process of which there is a need to determine the cost of assets on the eve of losses.
The new economic mechanism implies new relations between commodity producers and society as a whole (represented by the state, municipality). By virtue of this, the need arises in an objective assessment of enterprises for tax purposes.
So, the process of assessing enterprises gives a realistic idea of \u200b\u200bhow the company will work in the future. This is valuable to everyone who is connected with it: for owners, managers, workers, consumers, suppliers, bankers, insurance and tax services, investors.
The purpose of the assessment determines the value of the cost that is required to determine.
The following types of costs are used in the literature on business assessment issues.
In the planned economy, most often used in the assessment book value. However, in a market economy, the market value is of great practical importance. This type of value applies to all matters related to federal and local taxes, it is the market value that is determined when evaluating for the purposes of the purchase and sale of an enterprise or part of its assets. The following is practically generally recognized in market value: "The market value is the price expressed in cash or their equivalents with which it agrees to sell the seller and wanting to buy a buyer who have fallen in any pressure and well-aware of all relevant to the purchase of facts."
The following points are very important in this definition. When determining the market value, we are not talking about a particular seller and the buyer, but a hypothetical sale transaction is considered based on the supply and supply on a specific market at a certain time, i.e. the assessment has a temporary and spatial certainty. The need is also the need for information about the state of the market and the lack of pressure on the buyer and the seller.
Market value is the average expected, most likely price. The actual market price may differ from the market value due to various reasons, for example, such as the lack of information, the skill of the parties to negotiate, etc. When assessing the business, the most likely is determined average price Purchase and sale of property rights to the capital of the enterprise, i.e. market value.
In contrast to market value, the investment value involves an assessment of the cost of capital capital for a particular investor or group of investors. The investment value is defined as "the cost for each investor on the basis of individual investment requirements, in contrast to the concept of market value, which is impersonal and does not depend on other factors."
There are a number of reasons for which an investment assessment may differ from the market. It seems that the main reasons for their discrepancy may be differences in estimating future profitability, differences in the degree of risk, various tax situations, a combination with other objects belonging to the owner or controlled by it.
Some studies also identify internal or as it is also called the fundamental cost. It differs from investment in that it is an analytical estimate of the cost, based on the intended internal characteristics of investments, not affected by the features relating to any particular investor, i.e. This assessment of the analyst internal asset, based on its forecast of the market price asset in the future. For example, for the securities market, it is very important to determine the difference between the value of the securities determined by the market, and the internal value of the security, i.e. The cost of which the security should have and which it will have when other investors will receive the same information as the analyst. If the price is in the market below internal cost, the analyst comes to the conclusion that the stock is profitable to buy and vice versa.
The deposited cost is the value of the asset that the lender hopes to get from the sale on the market of this asset in the event of an insolvency of the enterprise.
Also the replacement value and the cost of substitution are also distinguished. Replacement cost is the cost of reproduction of an exact copy of an enterprise or other asset, even if there are more economical analogues. The cost of substitution is the cost of creating an asset similar to functions. These types of value are widely used in the field of insurance.
There are evaluating the current enterprise and evaluation in liquidation.
The assessment of the current enterprise suggests that business has favorable development prospects, so you can expect the company's conservation as a system, and the value of the whole, usually always larger than the simple amount of the values \u200b\u200bof individual elements.
If the enterprise's closure is expected and the implementation of business assets separately, it is important to determine its liquidation value. In its definition, it is necessary to take into account all the costs associated with its liquidation, such as commissions, administrative costs to maintain the work of the enterprise before its liquidation, the costs of legal and accounting services. The difference between the revenue, which can be obtained from the sale of assets of the enterprise in the market and the costs of liquidation gives the liquidation value.
So, for each sphere of activity during the assessment, the types of estimated costs adequate to it are used. For example, when evaluating business and selling business transactions or it is important to assess the market value; For insurance - the cost of recovery; for lending - the mortgage value; To eliminate the enterprise - liquidation cost, etc.
The relationship between the purpose of assessment and the type of cost.
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Note estimates |
Types of value |
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1. Help to potential buyer (seller) Determine the estimated price |
Market value |
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2. Determination of the feasibility of investment |
Investment value |
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3. Ensuring the application for a loan |
Called value |
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4. Property Rating |
Market, or other value recognized by tax legislation |
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5. Determination of the coating amount insurance contract or providing requirements for loss or damage to the insured assets |
Insurance cost |
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6. Possible liquidation (partial or complete) existing enterprise |
Liquidation value |
The supply of enterprise is determined by consumer preferences. The latter depend on the usefulness of this product, that is, its future profits, the time of their receipt, the risk with which it is associated, the possibility of their assignment, possibilities if necessary, to control the enterprise and (or) to resell this product.
The profit that the owner can receive from the implementation of the enterprise depends on the nature of its operating activities and the possibility of profit from the sale of this enterprise. Profit from operating activities in turn is determined by the ratio of income and expenses streams.
Of great importance for the formation of market value and the price is not only the value of the expected profits, but also the time of their receipt. It's one thing when the owner acquires assets and quickly begins to make a profit from their use, and another thing is when investing and returning capital is significantly removed from each other.
At the magnitude of the market value and the cost of capital of the company, the risk as the likelihood of obtaining expected in the future is inevitably affected.
One of of essential factorsaffecting the market value and price of own capital of the enterprise is the degree of control that a new owner receives.
If the enterprise is bought in an individual private property Or if purchased controlling package, the new owner acquires such rights as appointing managers, to determine their payment; influence the strategy and tactics of the enterprise; buy or sell assets; restructure and even eliminate this enterprise; make a decision on the absorption of other enterprises; Determine the amount of dividends, etc. Due to the fact that great rights are bought, the market value and the price in this case will be higher than in the case of buying a non-controlling package. Although in some circumstances, a non-controlling package may be greater value.
One of the most important factors determining the market value and price of the company's own capital is the high liquidity of this property. The market involves a premium for assets that can be quickly drawn to money with minimal risk of loss of cost. Hence the market prices for enterprises should be lower than on similar open societies.
Market value and price reacts to any restrictions that business has. For example, if the state limits the prices of enterprise products, then the market value of equal capital of such an enterprise will be lower than for the absence of restrictions.
The demand for enterprises, along with utility, also depends on the solvency of potential investors, money value, the ability to attract additional capital on the financial market. The attitude of the investor to the ratio of yield and risk in time is largely determined even age structure Investors, since younger tend to go for a greater risk for the sake of higher profitability in the future.
An important factor affecting the demand of the enterprise is the presence of substitute goods, as the investor always considers alternative opportunities for its investment and chooses that of them that most complies with its needs.
The demand for enterprises depends not only on these factors. Social and political factors are also important, such as attitudes to businesses in society and political stability. The prices of suggestions are primarily determined by the production costs of similar enterprises in society. The number of sellers of enterprises is very important. On solutions and buyer, and the seller affects the prospect of this enterprise. At the conclusion of the transaction, only the part of the capital is taken into account, which can make a profit in one form or another in the future (or from economic activities or from the sale of property and business). This, in turn, depends on the place of the enterprise in the system of scientific and technological progress, the possibilities of using new technologies, creating new products.
As noted, the market price (expected and actual) on their own capital of the enterprise, like any other product, is determined by the relationship between supply and demand. If demand exceeds the offer, then as a result of competition, buyers are ready to pay the maximum price. The upper limit of the price of demand is determined by the current value of future, profits that the owner can receive from ownership of this enterprise. This is especially characteristic of industries in which the proposal of enterprises is limited by natural abilities. It follows that the highest border in the event of exceeding demand over the proposal will be approached by prices for commodities. At the same time, in case of exceeding demand over the proposal, the appearance in some sectors of new enterprises is possible, which will increase the number of enterprises and, in the long term, the prices of these enterprises can slightly fall.
If the offer exceeds the demand, then prices are dictated by the manufacturer and the minimum price for which it can sell his capital of the enterprise is determined by the cost of producing this product.
So, the market price (expected and actual) equal capital of the enterprise is determined by its profit in the future, costs for the creation of similar enterprises and the ratio of supply and demand.
The study of the economic foundations of the enterprise, its reproduction allows you to allocate the methodological principles for assessing enterprises, firms as a base of sale transaction. Among them, the following groups of principles can be distinguished:
- based on user's representations;
- related to production;
- condected by the actual market environment.
The final principle in this pyramid is the principle of the best and most efficient use. All principles of assessment are closely interrelated. Many principles do not mean that all of them can be applied to each object. In each case, basic and auxiliary principles are allocated. It should be noted that when it comes to the principles, only the basic patterns of the behavior of the market economy are manifested. In real life, a number of factors can distort their action. For example, state intervention sometimes distorts the implementation of certain assessment principles. Imperfection market relationsCharacteristic for the transition stage to the market economy, further deforms the action of the assessment principles. For these reasons, the principles of evaluation reflect only the tendency of the economic behavior of the subjects of market relations, and do not guarantee such behavior. At the same time, with the development of the market, the actions of the objective principles of assessing enterprises will increase. This circumstance makes the necessary particularly careful study of the movement. market Mechanism Implementation of enterprises, its changes, all factors affecting the behavior of the market entity such a complex product, which are enterprises.
In the center of the market economy there is a consumer, so Let's start considering the principles of the assessment with the principles based on user's representations.
First of all, it is necessary to determine the features of the investor's buyer. It acquires a qualitative and quantitative capital. The goods created within the framework of this capital is not always crucial. The purpose of the purchase is profitable attachment (investment) of money. And here the usefulness criteria acquire a somewhat different character than for the product-product. When evaluating the enterprise, first of all, the utility is considered. The company has the cost only when it can be useful to the potential owner. Usefulness for each consumer is individual, it is highly and quantified in time and in space. However, as the overall utility for the owner in a market economy, you can allocate the ability of enterprises to generate income. Based on these considerations, the usefulness of the enterprise as a special product can be defined as follows. . The usefulness of the enterprise is its ability to generate income in this place and during this period of time. The higher the utility, the higher the assessment.
So, the first and leading principle of the assessment of the enterprise-product is profitability. From the position of the user, the company is completely logical is not higher than the minimum price for a similar enterprise with the same utility. Similarly, it will be unwise to pay for the existing object more than the creation of a re-other object with a similar utility on an acceptable time frame. And another aspect of applying this principle. If the investor analyzes the income flow, the maximum price will be determined by studying other income streams with a similar risk and quality level. At the same time, the replacement object does not have to be an accurate copy, but should be similar to the estimated object and the owner considers it as the desired substitute. The boundaries of the "space of equally desired substitutes" are determined by the needs and desire of the user. Suppose some entity wants to acquire enterprises producing Moskvich cars in their property. But at the same time, it compares the prices of similar plants with prices for plants producing substitutes. The fact is that the buyer is not always limited to the business of the same type, as large or smaller variations in geographical location are possible. That is why it is important to identify the limits of the variety of possible substitutes equivalents.
Thus, the following methodological principle of the assessment of the enterprise can be distinguished - this is the principle of substitution. It is determined as follows: the maximum cost of the enterprise is determined by the lowest price, but which can be purchased by another object with equivalent utility.
From the principle of utility, another principle of evaluation follows - this is the principle of waiting or foresight. Of course, the past and present business are important, however economic assessment Business determines its future.
The past and the present state of business is only the original basis, the key to understanding the future behavior. The usefulness of any enterprise is determined by how long the predicted future benefits (income) are estimated.
The evaluation of the enterprise directly affects the idea of \u200b\u200bthe net return from the functioning of the enterprise and the expected revenue from resale. At the same time, the magnitude, quality and duration of the expected future income flow is very important. However, the expectations regarding this income flow may change. This once again confirms the assumption that has previously expressed that the company's assessment is based on its financial stability.
So, it is possible to summarize the analysis of the first group of the principles of an enterprise assessment as a product. It includes the principle:
- profitability;
- substitution;
- expectations.
The second group of assessment principles is mainly due to production.
As is well known, any economic activity requires the presence of four factors of production, which are land, labor, capital and management. Each factor must be paid from income generated by this activity. Since the land of physically immovable, the factors of labor, capital and management should be involved in it. This means that at first compensation must be made for these factors and the residual amount goes to the payment of the Earth. Economic theory says that the earth has " residual value"And it is worth something when there is a balance after paying other factors of production. Residual productivity may be the result of the fact that the earth allows the user to extract maximum income, or to reduce costs to the limit. For example, the company will be appreciated above if the land plot will provide a higher income or if its location allows you to minimize costs.
Production factors are not evaluated by themselves, but taking into account the period of their reproduction, places in the circulation of capital. From this point of view, obsolete technological, the equipment will require a complete replacement, payment of dismantling and installing new equipment, which should be taken into account when evaluating the enterprise. And, on the contrary, a highly qualified composition of the workforce should be assessed from the point of view of change or invariably, the types of production activities; Highly qualified workers who have extensive experience in obsolete equipment, harder to retire. All these factors, and not just a means of production and workforce, must be taken into account by the buyer completely.
So, the factors of production are taken into account by the buyer-entrepreneur also from the point of view of the movement of capital: their places in the system of its reproduction, functional purpose, Movement period, etc. Only a similar approach can afford to reasonably look into the future behavior of the acquired enterprise.
An increase in one or another production factor can increase or decrease the cost of the object. Another principle of assessing enterprises is followed from an important situation of economic theory, the content of which can be reduced to the following: as resources are added to the main factors of production, the net returns tend to increase the rapid growth rate, but after reaching a certain point, the total return, although it grows, However, already slowing down the pace. This slowdown occurs until the cost increase is less than the cost of added resources. This principle is based on the theory of marginal income and limit costs, therefore, is called the principle of limiting performance.
The company, as already mentioned, is a system, and one of the patterns The existence and development of the system is balanced, the proportionality of its elements. The greatest efficiency of the enterprise is achieved with objectively - due to the proportionality of production factors. So, in assessing the enterprise, it is necessary to take into account the principle of balance or proportionality, according to which the maximum income from the enterprise can be obtained by observing the optimal values \u200b\u200bof production factors, their relationships.
One of important moments The actions of this principle is the compliance of the size of the enterprise market needs. So, if an enterprise is too large to meet the needs of the market, then its effectiveness falls, especially if the delivery of resources, goods is difficult.
As already mentioned, the enterprise, like any other product, has a cost, if it is useful, for any user or user group. The higher the utility, the higher the demand. The more expected income from the enterprise, the more the demand for it on the market.
An important property of goods is its relative deficiency. The ratio of the proposal, the higher the deficiency, and, consequently, the price. This property fully refers to enterprises. So, if only a minor number of profitable enterprises offers the market, the demand for them will be high, and therefore, their price should be high, and on the contrary, if the market is full of enough profitability by enterprises, but from which the price is not expected to price the price These enterprises will be low.
In the long-term aspect, demand and supply are relatively effective forces in determining the direction of price changes. But in short periods of demand for demand and suggestions may not be able to effectively work in the enterprise market. Market distortions may be a consequence of the monopolist position of the owners. In addition, government control mechanisms may influence this market. For example, the authorities can establish control over prices for enterprises.
The fact is that such a specificity of this product has important in assessing enterprises, as the inability to postpone its "future" until better times.
First, this item represents product-capital determining the property of which is the continuity of movement, and any stop eliminates its basic quality.
Secondly, one of the most important elements of this capital-product is a labor force, which cannot but work, not consume.
Any stop for a long time carries moral aging, fraught social consequences, conflicts, requires the regulatory role of the state, the payment of forced "idle". This is expensive to society, which can not be taken into account.
If there is a redundant offer or missing demand, prices will decline. In the short aspect, the proposal is relatively inelastic. This means that to increase the offer of enterprises, a long time is required for their creation, and, therefore, even if prices have increased, the offer cannot be increased very quickly. It is also difficult to reduce the proposal of enterprises if more is already built than the value of solvent demand.
The opposite influence on prices has a lack of supply or increased demand. Demand is usually more elastic than proposal, it reacts stronger to price changes, their trends. For example, the amount of demand is influenced by the amount of demand. cash, interest rates, inflation, political and social climate, etc.
When demand and supply are balanced, the market price reflects the cost of costs. If the market prices are higher than the costs and profits grow, begin to build new enterprises and gradually the equilibrium is restored. If market prices, below costs, then new construction slows down or generally stops until the increase in demand causes price increases.
Market - This is freedom, therefore, with any deal, each of the parties has the ability to choose. For example, a business seller may not want to sell it to a specific buyer or can decide not to sell it at all, or completely eliminate its enterprise or find another option. The buyer also has a number of alternatives to the purchase of a business for a certain price. For example, the buyer can buy a business from another seller or can start a new business, or can invest its funds to another enterprise. The presence of alternatives affects foam, therefore, another assessment principle is the principle of alternativeness.
As already noted, the usefulness is also determined in time and in space, and the market takes into account this certainty, first of all, through the price. If an enterprise complies with market standards, which is characteristic of this time for a given area, the price of it will fluctuate around the average maturity; If the object does not meet the requirements of the market, then this is usually reflected in the lower price of this enterprise. With the action of such a pattern, another assessment principle is associated - the principle of compliance, according to which enterprises that do not meet the requirements of the market for the equipment, technology, the level of profitability, etc. Most likely, will be estimated below the average.
The principles of regression and progression are related to the principle of compliance. Regression occurs when an enterprise is characterized by unnecessary in relation to the data market conditions improvements. The market price of such an enterprise is most likely to not reflect its real cost and will be lower than the real cost of its formation. The progression occurs when as a result of the functioning of neighboring objects, such as objects providing improved infrastructure, the market price of this enterprise will increase.
As is known, one of the factors affecting the financial sustainability of the enterprise is competition. If the industry in which the company has excessive profits, then other entrepreneurs will try to penetrate into this area in a free market economy, this will increase the proposal in the future and will reduce the rate of profit. Currently, many of our enterprises receive super-profits only as a result of their monopolistic position and, as competition exacerbations, their income will noticeably decrease. This implies that when evaluating enterprises, it should take into account the degree of competitive struggle in this industry now and in the future, this is the content of the principle of competition in the assessment. If a competitive struggle is expected, while predicting future profits this factor can be taken into account or due to direct reduction in income flow or by increasing the risk factor, which will again reduce the current value of future income.
But not only the competition affects the financial stability of the enterprise, and, consequently, at its price. The stability of the enterprise has the impact of many other factors. Moreover, the external and internal factors affecting the financial stability of the enterprise, their interaction is constantly changing, which has a positive or negative impact on the yield of the enterprise. This leads to fluctuations in prices for this enterprise.
A large influence on the price of the enterprise has a period of its reproduction: the formation, use, update, which requires different investments, gives an incommensurable return, its dynamics. What the enterprise is located in the life cycle of its development, reflects on his opaque. From the foregoing it follows that when evaluating enterprises, it is necessary to comply with the principle of accounting or the principle of variability.
So, the basic principles of assessing enterprises in a market economy are the following. In assessing the enterprise, it is necessary to assess its usefulness, the possibility of substitution to other, expected yield, location, limiting performance, balance of factors of production, demand and supply, possible alternatives to market behavior, the company's compliance with the requirements of the market, the degree of competitive struggle and changes in the main factors affecting the financial Stability of the enterprise.
Based on the above provisions, it follows that in order to evaluate the company, it is necessary, first of all, to consider possible methods The use of this enterprise based on the terms of the market environment. The location of the enterprise, the demand for the market, the possibilities of business development, determine the alternative ways to use this enterprise.
Further, the assessment of the company requires the determination of costs for the implementation of each of the possible alternatives to business development. At the same time, business costs are investigated, its productivity is determined by the break-even point. Based on this, it is possible to estimate the financial feasibility of the implementation of this or that way of developing an enterprise. An important criterion for financial feasibility is the sustainability of a sufficient income company, i.e. its financial stability. The issue of the economic division of property rights to property is considered, if such allows you to increase the total cost. The economic separation takes place if the rights to the object can be distinguished by two or more property interests, as a result of which the total cost of the object increases. The principle of economic separation states that property rights should be divided and connected in such a way as to increase the total cost of the object. An important direction of the application of this principle is its use in providing a mortgage loan.
The result of such an analysis is to determine the best and most efficient use of property, in other words, the definition of the use of an enterprise, which is technically legally and financially feasible and which provides the owner to obtain the greatest benefits. This is the main principle of assessing enterprises - the principle of the best and most efficient use. This principle is leading in the assessment, as it combines all other principles for assessing the value of the enterprise, somehow: utility, replacement, expectation, residual property, utmost utility, balance, demand and supply, alternativeness, compliance with market requirements, degree of competitive Fight and occurring changes in the external and internal environment.
The principles of evaluation of enterprises considered here are based on their assessment methods that need an independent study.
Chapter 2 Approaches and Methods used to assess the business
Assessment of the property of enterprises is based on the use of three main approaches: costly, profitable and comparative. Each of the approaches involves the use of its specific methods and techniques, and also requires compliance. special conditions, availability of sufficient factors. The information used in a particular approach reflects either the present position of the company, or its past achievements, or expects expected in the future. In this regard, the result obtained on the basis of all three approaches is the most reasonable and objective.
2.1 D.skit approach to business assessment
When purchasing an enterprise (business), the question arises about the price that can be paid, regardless of whether it will be the cost of its construction or similar enterprise. The investor will never pay more than the amount of income, which will bring him this business in the future. This seemingly simple principle and underlies the approach to an assessment of a business called income.
The income approach allows you to compare the current costs of the investor with future incomes, taking into account the time and risk factors typical of the purchased business. It is the results this approach provide the opportunity to manage enterprises to identify problems that slow down the development of business and the growth value of the company; make decisions that increase the income of shareholders, both in short and long-term periods. The dynamics of the cost of an enterprise, determined by the income approach over a number of years, may be an assessment of the performance of managers for owners of companies. In addition, the best recommendation of the company to which potential investors can be provided is a stable growth of its value determined by the income approach.
In accordance with section II-A BVS-VII Standard "Profitable Approach to Business Evaluation" of the American Society Appraisers (BVS - Business Valuatio #standard), an income approach ( Income Approach.It is defined as a general way to identify the company's market value, shareholders share in share capital or securities, within which one or more methods are used based on the recalculation of expected income.
Examples of methods used within the framework of the income approach are the "Method of Revenue Capitalization" and "Method of Compacting Future Revenues". Expected income as they are understood as part of an increasing approach, have a monetary expression. Depending on the nature of the company's evaluated company, the share of shareholders in its capital or securities, as well as other factors, the appraiser may consider the net cash flow, dividends, various forms of profit as expected income.
Method of capitalization of income most used in the context of a stable economic situation characterized by uniform permanent pace Growth.
When using the capitalization method, the representative value of revenues is divided or multiplied by the capitalization coefficient to recalculate the income of the enterprise in its value. Capitalization coefficient can be calculated based on the discount rate (with subtraction from the discount rate of the expected average annual growth rates cash flow).
Determining the cost of business by the DDP method is based on the assumption that the potential investor will not pay for this business amount greater than the current cost of future income from this business. The owner will not sell his business at a price below the current value of the projected future income. As a result of the interaction, the parties will come to an agreement on the market price equal to the current value of future income.
This assessment method is considered the most acceptable from the point of view of investment motives, since any investor who invests money in an existing enterprise ultimately buys not a set of assets consisting of buildings, structures, machinery, equipment, intangible values, etc., man Future income , Allowing it to recoup the invested funds, make a profit and increase your welfare.
The use of this method is most substantiated to evaluate enterprises with a certain history of economic activity (preferably profitable) and at the stage of growth or stable economic Development. This method is less applied to the evaluation of enterprises of endure systematic losses (although the negative value of the business value may be a fact for making management decisions).
"Transformation" and "Normalization" of accounting reporting also has very important.
Under the "transformation" of accounting reporting implies revision and / or change in the form of accounting reporting, if it is conducted in accordance with local standards accounting. In general, the transformation is not mandatory procedureBut allows you to achieve better results.
"Normalization" of financial statements involves in the balance sheet, as well as a statement of income changes in order to exclude income and expenses that are not characteristic of the normal business. The amendments made in the framework of the implementation of reporting normalization, in particular, may concern:
Lump sum income and expenses
Income and expenditures on redundant or inoperative assets,
Revenue and expenses of the related side,
Discounted cash flow method
The discounted cash flow method (Cash Flow Discounting Approach) has certain advantages over other estimated methodologies for the following reasons:
Based on the preparation of the forecast of the company's future activity on the basis of a business plan, and not on retrospective data;
Takes into account the cost of money in time;
Allows you to take into account the expected changes in business.
When analyzing discounted cash flows, the analyst is at some time the movement forecast moneywhich can reflect any changes in financial streams and thereby take into account many factors affecting financial flows.
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