Module 1 - Introduction to Valuation Concepts and Methodologies

PrE 26 – VALUATION METHOD

MODULE 1

INTRODUCTION TO VALUATION CONCEPTS AND METHODOLOGIES

Learning Objectives:

1. Explain or describe the Importance of Valuation methods

2. Identify the different objectives of valuation methods

3. Identify the Process of Valuation process

4. Determine the principles of valuation

5. Compare the different types of valuation methods

1. Intrinsic Value – refers to the value of any asset based on the assumption assuming there

is a hypothetically complete understanding of its investment characteristics. It is the value

that an investor considers, on the basis of an evaluation or available facts, to be the “true”

or “real” value that will become the market value when other investors reach the same

conclusion.

2. Going Concern Value – the going concern assumption believes that the entity will

continue to do its business activities into the foreseeable future.

3. Liquidation Value – the net amount that would be realized if the business is terminated

and the assets are sold piecemeal. It is particularly relevant for companies who are

experiencing severe financial distress.

Portfolio Management

and measuring the intrinsic value of a firm. Fundamentals refer to the

characteristics of an entity related to its financial strength, profitability or risk

appetite.

Source: C.A.Diquit,CPA,MBA and M.V. Lascano, H. C. Baron, A. T. L. Cachero., Valuation Concepts and

Methods, 2021 Edition, Philippines, 2021