Essay

By discipline: "Evaluation of enterprise value"

Subject: “Cost-based approach.

Liquidation value method"

Introduction……………………………………………………………….…..……………….…….3

1. Cost approach……………………………………………………….….4

2. Definitions for the concept of liquidation value……………………8

2.1 Liquidation value method……………………..……………….9

2.2 Types of liquidation value……………………..………………...9

3. Methods for assessing liquidation value…………………………….12

3.1 Algorithm for determining liquidation value based on

accounting data on liabilities……………………………………..…12

3.2 Algorithm for determining liquidation value based on

accounting data for the asset…………………………..………………..14

Conclusion…………………………………………………………………………………16

Bibliography……………………………………………………………..………………..17

Introduction

a) orderly liquidation

b) forced liquidation

Liquidation value is the market value of the property minus all costs associated with its sale, including sales commissions, advertising costs, storage costs, etc.

1. Cost approach

The cost approach is a set of methods for assessing the value of an object, based on determining the costs necessary for the reproduction or replacement of an object, taking into account its wear and tear.

The costs of manufacturing an object and its subsequent sale are a very important factor in the formation of cost.

Cost approach methods require a mandatory assessment of the possible total cost of manufacturing an object and other costs borne by the manufacturer and seller. These methods are indispensable when it comes to objects that are practically never found on the open market and are manufactured to individual orders, including special and unique equipment.

When valuing using the cost approach, the process of forming the seller’s price (offer) is modeled based on considerations of covering all costs incurred by the price and obtaining sufficient profit. Since the methods of the cost approach are often based not on real prices for similar objects, but on calculated standard costs and standard profits, then, strictly speaking, they provide an assessment not of purely market value, but of the so-called value of an object with a limited market.

Cost-based valuation methods can be divided into:

Resource and technological assessment models;

Normative-parametric models;

Index valuation methods;

Resource and technological assessment models. In general, a typical resource-technological model can be described as follows:

Compared to the assessment of the object as a whole, its assessment based on the resource-technological model allows us to more accurately take into account the influence of the configuration of the object and, consequently, the composition and values ​​of its technical characteristics on the value of the cost. However, in this case, the center of gravity shifts to assessing the cost of its components and assemblies, which is justified only if there is a developed market for these components. Such a market currently exists only in the field of office and computer equipment.

Normative-parametric models. In contrast to the resource-technological model, the standard-parametric costs of the assessed object are considered as a function of the totality of its technical characteristics, and not of its components.

In general, a typical normative-parametric model can be described as follows:

WITH

IN– specific (per unit of productivity or power) cost of the basic product;

D– power or productivity of the object being assessed;

K– a summary coefficient characterizing the dependence of the specific estimated cost or price of a product on the value of the parameters. It is equal to the product of partial coefficients that take into account the influence of the corresponding parameter on the estimated cost or price of the product;

Regulatory-parametric models have been successfully used in the development of a number of wholesale price lists, which can serve as a source of relevant regulatory information.

Index methods of assessment. Often, as part of the cost approach, the index method is used. For many appraisers, the use of price indices is one of the simplest and most effective (especially for mass appraisal) ways to solve appraisal problems. Price indices are relative indicators that reflect the dynamics of price changes. In many countries, government statistics bodies publish indices of domestic and foreign trade prices for individual goods and product groups. Price indices are always given indicating the base year, in which the index value is taken to be 100% (or = 1).

In general, the corresponding model is described as follows:

WITH– the desired value of the valuation object;

Co – the base cost of the object, for example, its full replacement cost, contained in the statistical report on the results of the previous revaluation of fixed assets;

I – an index (chain of indices) of price changes for the corresponding group of machinery and equipment for the period between the valuation date and the previous revaluation of fixed assets.

The basis for calculating domestic wholesale price indices is not the prices of specific transactions, but mainly nominal prices. Therefore, published indices provide only an approximate picture of the dynamics of list prices, and not the prices of actual transactions. Depending on the current market conditions, the terms of the transaction, including terms of payment, sales volume, specific prices will differ to one degree or another from the list prices.

Price indices are an important indicator that allows us to identify the main trends in price movements. They are widely used in analyzing and forecasting market conditions, making it possible to assess the changes that have occurred in the price level over a number of years. True, it is necessary to take into account that the index as an average and relative indicator, as well as the unit cost, does not provide a sufficiently accurate representation of the changes that have occurred in the prices of any specific product. Using indices, it is possible to identify the dynamics of prices for products of entire industries or, in extreme cases, of any product groups. The readings of such a group index may differ from the price dynamics of a product included in this group with specific quality indicators. But calculation using the index method can distort the estimated value for a number of reasons. Let's list some of them:

The result depends on the accuracy of determining the historical cost;

Difficulty finding a suitable index series;

Unknown relative weights when deriving indices;

Index obsolescence;

Accumulation of errors.

The cost approach procedure begins with the collection and analysis of information about the internal structure of the object, its structure and the composition of the main elements. However, technical characteristics alone are not enough; a detailed description of the design, general view drawings and specifications are required. A thorough inspection of the facility is also carried out.

In the methods of the cost approach, an important role is also played by the assessment of the degree of wear and tear of the object being valued, this is explained by the fact that the cost of reproduction or replacement cost of the object obtained at the beginning does not take into account wear and tear, and only at the next stage the resulting cost estimate is adjusted for the actual wear and tear of the object (physical, functional and external) .

2. Definitions for the concept of liquidation value

To determine the liquidation value, one of the following assumptions is usually used:

a) orderly liquidation(Orderly Liquidation): the sale of assets within a reasonable period of time necessary to obtain the highest price for each of the assets sold;

b) forced liquidation(Forced Liquidation) involves the sale of assets as quickly as possible, for example, at an auction (liquidation value during forced liquidation is often called auction value - Auction Value).

The liquidation value takes into account not only the method of sale, but also the costs of sale, the cost of maintaining assets before sale and other costs. Typically, although not always, when valuing a controlling interest in equity ownership, liquidation value represents the lowest margin of value.

2.1 Salvage value method

Liquidation value is the market value of the property minus all costs associated with its sale, including sales commissions, advertising costs, storage costs, etc.

Liquidation value may vary depending on whether the sale is urgent or occurs in the ordinary course. In the latter case, the liquidation value will be close to the fair market value minus expenses.

The problem of liquidation value appears when an organization is deprived of the economic and organizational capabilities to independently generate value, primarily surplus value, and at the same time, financial, economic, and labor obligations, recognized by law, to other subjects of civil turnover are preserved.

Liquidation value is the net amount of money that the owner of a business can receive upon liquidation of the business and closure of its business, separate sale of assets and after settlements with all creditors.

2.2 Types of liquidation value

There are three types of liquidation value:

· Ordered, when the sale of the assets of the liquidated enterprise is carried out within a reasonable period of time, so that the highest possible sale prices for the assets can be obtained;

· Forced, when the assets of an enterprise are sold as quickly as possible, often simultaneously and at one auction;

· The cost of cessation of the assets of a business, when the assets of the business are not sold, but are written off and destroyed. The enterprise value in this case is a negative value, since in this case certain costs are required for the destruction of material assets.

The sequence of work for calculating the orderly liquidation value of an enterprise, i.e. the value that can be obtained through the orderly liquidation of the enterprise’s business, is as follows:

· Development of a calendar schedule for liquidation of enterprise assets.

· Calculation of the current value of assets, taking into account the costs of their liquidation.

· Adjustment of the current value of assets.

· Determination of the amount of the enterprise's liabilities.

· Subtracting the amount of the enterprise's liabilities from the current (adjusted) value of assets.

The development of a calendar schedule for the liquidation of the enterprise’s assets is carried out with the goal of maximizing, as far as possible, the proceeds from the sale of assets to pay off the debt of the enterprise.

As a rule, it is assumed that the business of the enterprise ceases and only the process of liquidation of the enterprise is carried out. Liquidation of a large enterprise takes about two years.

Calculation of the current value of assets is carried out using the asset accumulation method, using the data from the balance sheet of the enterprise as of the valuation date (or as of the last reporting date). Checking and adjusting balance sheet accounts is carried out simultaneously with the inventory of the enterprise's property as of the valuation date. The inventory of the enterprise's property is carried out in accordance with the methodological instructions for the inventory of property and financial obligations. Simultaneously with the inventory of the enterprise's property, the market value of the land plot on which it is located and the current value of other assets are calculated.

Adjustment of the current value of assets. When calculating the liquidation value of an enterprise, it is necessary to take into account and subtract from the value of assets the costs associated with their liquidation. These are administrative costs for maintaining the operation of the enterprise until the completion of its liquidation, commission payments, necessary taxes and fees, severance pay and payments, costs of transporting sold assets, etc. The proceeds from the sale of assets, cleared of associated costs, are discounted to the valuation date at an increased discount rate, taking into account the risk associated with this sale and the timing of the receipt of money.

After adjusting the assets of the balance sheet, it is necessary to adjust the liabilities of the balance sheet in terms of long-term and current debt. Particular attention must be paid to settlements on preferred shares, tax payments, as well as so-called contingent liabilities, which often arise as a result of ongoing or potential legal proceedings. It is possible that during the analysis of accounts payable, it will be possible to negotiate changes in the terms of repayment of the company's debts.

After determining all the costs associated with the liquidation of the enterprise, the adjusted value of all assets of the balance sheet is reduced by the amount of costs associated with the liquidation of the enterprise, as well as by the amount of all liabilities of the enterprise. Thus, the liquidation value of the enterprise is obtained.

3. Methods for assessing liquidation value

The direct method is based on a comparative approach and can be carried out either through direct comparison with analogues, or through statistical modeling (correlation and regression analysis). However, this method has limited applicability in Russian conditions due to the insufficiency and inaccessibility of the information base on transaction prices under conditions of forced sale (including bankruptcy proceedings).

The indirect method is expressed in calculating the liquidation value of an object relative to its market value. It is carried out in three stages: calculating the market value of the object, calculating the discount for the forced nature of the sale of the object, calculating the liquidation value of the object. In this work, we used this option.

3.1 Algorithm for determining liquidation value based on accounting data for liabilities

This calculation is possible in several versions.

First option

This approach is suitable for calculating the liquidation value of an OJSC, the shares of which, at the time of the order for the calculation, were quoted on a domestic or foreign stock exchange in the form of ordinary, preferred shares and American (global) depositary receipts.

This approach assumes that it is necessary to calculate the total value of the entire property complex of the liquidated (reorganized) organization and that the organization is sold as a whole, and not in parts.

When starting the calculation, the appraiser should understand the value of the price/earnings ratio (P/E) that occurred during the past months of stock trading (presumably, it is rational to analyze the last three months). It is rational to accept the market prices of shares of a liquidated (reorganized) joint-stock company for calculating the liquidation value without additional adjustment if this coefficient for a given joint-stock company differs from the industry indicator by no more than 10%. For large negative deviations, an additional reduction factor will need to be introduced.

The liquidation value of the property complex is calculated under the assumption that the existing organization of production and management at the enterprise is liquidated (replaced), but the technological ability to create value with cash fixed and working capital and labor remains.

Second option

It is assumed that the technological viability of the liquidated (reorganized) organization is maintained when the existing management is replaced (or liquidated). It is further assumed that the asset is somehow summarily (cumulatively) valued and it is required to determine the value of accumulated liabilities to determine the amount of net assets. Net assets will be determined as the difference between the estimated amount of the asset and the estimated amount of the organization's debts.

The main task comes down to determining the value of debts, deducted from the assessed amount of the asset. The algorithm for this calculation can be represented by a set of the following actions:

a) debts on loans and credits are calculated for the entire period of the debt according to the rules of discrete accumulation. The amount of debt at a compound interest rate is calculated as:

FV = P(1 + r)n, (2)

amount of debt payable at simple interest rate:

FV = P, (3)

where FV is the future value, that is, the amount of debt to be paid;

P is the amount of the principal debt;

r is the interest rate accepted in the agreement, in fractions of a unit;

n is the period for which the debt was accepted, in years, fractions of a year;

b) determine for the remaining obligations accounted for as accounts payable, the amount of debt either in the amount of the fixed nominal value, or, if the agreement or established rules provide for additional payment of interest when repaying debts on time, - according to formulas (2, 3).

3.2 Algorithm for determining liquidation value based on accounting data for an asset

The liquidation value during liquidation (bankruptcy) and reorganization of an enterprise (organization) and making a decision on its calculation by assessing the value of individual elements of the asset is subject to determination using sequential actions within the framework of a special procedure.

Making such a decision means that the enterprise - the subject of assessment - is no longer considered by the market (or the state) as an operating single organizational and technological complex capable of creating real value. Appraisers in the Russian Federation have domestic methods for calculating the value of each element of the accounting asset of an operating enterprise (operating organization).

Liquidation value as an economic and valuation category requires a number of additions to known recommendations. First of all, when calculating the liquidation value, the appraiser is forced to focus more on the current, real prices of the material elements of the asset, and also take into account the conditions for using these production and non-production assets differently, not as it was in the liquidated enterprise (liquidated organization), in a different way. We showed something similar in Section 5. At the same time, the restrictions we showed in Section 1 regarding land, subsoil, etc. remain in force.

The initial information for calculations is contained in balance sheet lines, accounting registers, accounts, and inventory sheets. The balance itself usually requires analysis and clarification.

Conclusion

The cost approach has exceptional versatility; theoretically, any technical object can be assessed using this approach. In the cost approach, the sum of costs for the creation and subsequent sale of an object is taken as a measure of value, i.e. its cost.

Liquidation value may vary depending on whether the sale is urgent or occurs in the ordinary course. In the latter case, the liquidation value will be close to the fair market value minus expenses.

The problem of liquidation value appears when an organization is deprived of the economic and organizational capabilities to independently generate value, primarily surplus value, and at the same time, financial, economic, and labor obligations, recognized by law, to other subjects of civil turnover are preserved.

The liquidation value method of valuing an enterprise's business is used when the enterprise is in bankruptcy or liquidation, or there is serious doubt about the ability of the enterprise to remain operating and continue its business.

The liquidation value of the valuation object can be calculated using a direct or indirect method.

The direct method is based on a comparative approach and can be carried out either through direct comparison with analogues, or through statistical modeling (correlation and regression analysis).

The indirect method is expressed in calculating the liquidation value of an object relative to its market value.

Bibliography

1. L.A. Drobozina. Analysis of the financial activities of the enterprise. Textbook. - M., 2000

2. Kovalev V.V. Analysis of the economic activity of the enterprise. - M, 2002

3. Romanovsky M.V. Business analysis and assessment. Textbook. - M., 2000

4. Valdaytsev S.V. Business valuation. Enterprise value management. M.: UNITY, 2002

5. Shulyak P.N. Enterprise finance. - M., 2002

6. Esipov V.E., Makhovikov G.A., Terekhova V.V. Business valuation. St. Petersburg: Peter, 2002

7. Business valuation. Ed. Gryaznova A.G. and Fedotova M.A. M.: Finance and Statistics, 2005

8. A.M. Kovaleva. Analysis of the economic activity of the enterprise. - M., 2001

When selling, acquiring or merging businesses, there is often a need to determine their value.

For these purposes, three main methods are used. One of them is the cost approach to business valuation.

Its essence

The cost approach establishes the value of an enterprise based on the amount of expenditure on resources necessary to ensure the full operation of the company, as well as their reproduction. That is, the price of a business is calculated taking into account the volume of assets and liabilities acquired by the organization in the course of its work.

Due to market characteristics, the real value of a business may differ significantly from the book value. This is influenced by several factors:

• inflation;
• use of various methods of accounting for assets and liabilities;
• market changes.

As a result of these conditions, the value of the organization may increase or decrease throughout the life of the company.

When determining the value of an enterprise, a specialist can choose any of the three existing approaches (there are also others). Expensive is considered the simplest and most universal among them. This option has its own scope, advantages, disadvantages, as well as a calculation procedure that is different from other methods.

The basic formula for valuing a business in this case is:

SK = A - O, Where:

• SK - equity capital;
• A - asset;
• O - obligations.

The result of calculations using this approach shows the cost of equity capital of the company.

You can get detailed information about this approach from the following video:

Scope of application, advantages and disadvantages

This approach is used by the buyer of an existing business to compare the cost of an existing enterprise with the possible costs of creating a similar one.

It is most appropriate to use the cost approach to evaluate a company if:

• the organization was recently created;
• the company as a whole is assessed;
• the enterprise is undergoing bankruptcy proceedings;
• the liquidated business is assessed;
• most of the assets are highly liquid, for example, the company’s shares are traded on the stock market, there are investments;
• the company has large assets.

This approach has its positive and negative aspects of use.

The advantages of its use include:

• the possibility of calculation in the absence of the necessary information for assessment using other methods;
• it can be used for organizations whose purpose is not to generate income, for example, government agencies;
• the results can be used to evaluate enterprises in an inactive market;
• with its help you can determine the value of unfinished production, land plots, buildings.

The negative aspects of use include two nuances:

• the calculations do not use the financial and economic indicators of the company, that is, the specifics of the business, as well as the prospects for its development, are not taken into account;
• When calculating, standard indicators are used, that is, assessment using this approach is not entirely based on market conditions.

What methods does it include?

The cost approach is based on two methods:

1. Net assets.
2. Liquidation value.

When calculating using any of these methods, you must use the company’s data. The appraiser selects one of them based on the characteristics of the company.

Net asset method

This method of calculation is based on the discrepancy between the book value and market value of the property and liabilities of the enterprise. According to this method, the appraiser must adjust the company's balance sheet.

This event is carried out in several stages:

• Implemented assessment of the market value of each property enterprises separately. At the same time, all types of assets are involved in this process - tangible, intangible, financial:
  • To evaluate real estate, the total cost of its acquisition or creation is first determined. Next, the amount of physical or moral wear and tear is subtracted from this value.
  • Plant and equipment are valued in the same way.
  • Inventory assets are converted to current value, taking into account delivery costs. Old and unusable objects are written off.
  • Finished products are adjusted taking into account market value. The price of products produced under concluded agreements with counterparties is not subject to change.
  • The value of cash and funds in bank accounts is not subject to adjustment.
  • Inventories are valued at cost, with older items being written off. It is also possible to determine the appraised value as the difference between the expected selling price and the costs incurred.
  • Shares and other securities are adjusted to market value.
  • The value of accounts receivable is calculated based on the results of an analysis of its occurrence and the possibility of repayment. In this case, it is established that it is overdue and is subject to full or partial write-off.
  • Deferred expenses, if their benefits are actually realized, are valued at their nominal value. However, when considering an unstable business, such assets are most often not taken into account as real.
  • , that is, licenses, exclusive rights, results of intellectual work, business reputation, are valued at market value.
• Installed current amount of debts of the company. The enterprise's obligations are assessed taking into account the timing of their occurrence. In this case, the discounting procedure is applied. That is, all debts are reduced to the current value on a single date for all these liabilities.
• Produced calculation of the estimated value of the organization's capital. It is calculated as the difference between assets and liabilities, the size of which was previously established.

The formula looks like this:

SC = RA - TP, Where:

• RA - market value of the enterprise's assets;
• TP is the current value of all obligations of the organization.

The result of the calculations is the market value of capital, that is, the value of 100% of the company's shares.

Liquidation value method

This method is based on establishing the amount of the difference between the total value of the property that the owner of the enterprise can receive when closing the business after the sale of its assets, and the costs of carrying out the business.

When using this method, you should consider all costs associated with the closing procedure:

• expenses for the services of lawyers and accountants;
• the cost of keeping the firm open until it closes.

The company is assessed using this method in several stages:

• The choice of liquidation value is justified. Not all companies can use this method to evaluate a business. The method is available only to those organizations that are in the process of closing either.
• A schedule for the sale of assets is being developed. It is necessary to ensure maximum profit from the sale of property. Different types of assets are sold in their own time frames:
  • real estate is sold on time from one to two years;
  • the rest, that is, materials and supplies, can be sold immediately after a decision is made on the need to sell the property.
• The current value of the property is calculated, excluding selling costs. At the same time, the identified value of assets changes taking into account the costs of sales.
• The changed value of assets is updated as of the valuation date.
• The profit of the liquidation period is taken into account.
• The amount of the company's liabilities is calculated. Adjustments are made for current and long-term debt. At the same time, possible liabilities that are expected to arise during the liquidation process are also considered.
• The liquidation value of the business is established. In this case, the amount of operating profit is added to the value of assets and the amount of the company's liabilities is subtracted.

The formula here looks like this:

LS = A + OP - P, Where:

• LS - liquidation value;
• A - assets;
• OP - profit or loss of the liquidation period;
• P - liabilities at current value.

The cost approach allows you to get a fairly objective idea of ​​the value of a business. This fact is ensured due to the peculiarity of the method, which consists in the most detailed analysis of property and assessment of each object.

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The liquidation value method is based on determining the difference between the value of the property that the owner of the enterprise can receive upon liquidation of the enterprise and the separate sale of its assets on the market, and the costs of liquidation.

When determining the liquidation value of an enterprise, it is necessary to take into account all costs associated with the liquidation of the enterprise.

The liquidation value is assessed in the following cases:

1. the enterprise is unprofitable, and the value of the company during liquidation may be higher than if it continues to operate;

2. a decision has been made to liquidate the enterprise;

3. the enterprise is in bankruptcy;

When determining liquidation value There are three types of liquidation :

1) orderly liquidation;

2) forced liquidation;

3) liquidation with the cessation of existence of the assets of the enterprise.

Orderly liquidation- This is the sale of assets over a reasonable period so that the maximum amount can be obtained from the sale of assets. For the least liquid real estate of an enterprise, this period is about two years. It includes the time to prepare assets for sale, the time to communicate information about the sale to potential buyers, the time to think about the purchase decision and accumulate financial resources for the purchase, the purchase itself, transportation, etc.

Compulsory liquidation means that assets are sold off as quickly as possible, often simultaneously and at the same auction.

Liquidation with the cessation of existence of the assets of the enterprise is calculated in the case when the assets of an enterprise are not sold, but are written off and destroyed, and a new enterprise is built in this place, providing a significant economic or social effect. The enterprise value in this case is a negative value, since certain costs are required to liquidate assets.

Ticket number 17. Cumulative assessment method discount rates are determined based on the following formula: d = Emin + I + r, where d is the discount rate (nominal); Emin - minimum real discount rate; I - inflation rate; r is a coefficient that takes into account the level of investment risk (risk premium). The main disadvantage of this calculation method is that it does not take into account the company's specific cost of capital. In essence, this indicator is replaced by inflation and a minimum yield comparable to long-term government bonds, which has nothing to do with the profitability of the company’s activities, the weighted average interest rate (on loans and / or bonds) and the structure of its liabilities. Methodological recommendations for assessing the effectiveness of investment projects recommend taking into account three types of risk when using the cumulative method: =) country risk; =) the risk of unreliability of project participants; =) the risk of not receiving the income provided for by the project. Country risk can be found out from various ratings compiled by rating agencies and consulting firms (for example, the German company BERI, which specializes in this). The size of the risk premium characterizing the unreliability of project participants, according to the Methodological Recommendations, should not be higher than 5%. It is recommended to set an adjustment for the risk of not receiving the income envisaged by the project depending on the purpose of the project. This method involves assessing certain factors that create the risk of not receiving planned income. When constructing a discount rate using this method, the risk-free rate of return is taken as a basis, and then the rate of return for the risk of investing in a given company is added to it. The disadvantages of this method include its subjectivity (dependence on expert risk assessments). In addition, it is significantly less accurate than the CAPM-based WACC discount rate method.

36. Valuation of controlling and non-controlling stakes. A controlling (majority) stake means ownership of more than 50% of the shares of an enterprise, giving the owner the right to complete control over the company. But in practice, if the company's shares are dispersed, this percentage can be significantly smaller. A non-controlling (minority) stake defines ownership of less than 50% of the company's shares. Grade value taking into account elements of control (controlling interest). Income approach: The income approach methods calculate the value of a controlling interest, since as a result of their application they obtain the price that an investor would pay for owning an enterprise, and the calculation of cash flows is based on control over the decisions of the administration regarding the economic activity of the enterprise Cost approach: net asset value method liquidation value method: When using cost approach methods, the value of a controlling stake is obtained, since only the owner of a controlling stake can determine the policy in the field of assets: acquire, use or sell (liquidate) them Comparative approach: transaction method : When calculating using the transaction method, an estimated value is obtained at the level of ownership of a controlling stake, since this method is based on an analysis of share prices with elements of control: controlling stakes in similar enterprises or entire enterprises (100% stake) Valuation of non-controlling interest Comparative approach: capital market method The value of the freely traded smaller share is determined because information on the quotations of individual shares on stock markets is analyzed

Ticket number 18. determination of the discount rate using the weighted average cost of capital model. In an economic sense, the discount rate is the rate of return required by investors on invested capital in investment objects of comparable risk levels. The calculation of the discount rate (the cost of raising capital) is calculated taking into account three factors: 1. The presence of many enterprises of various sources of attracted capital, which require different levels of compensation. 2. The need for investors to take into account the time value of money. 3. Risk factors (the degree of probability of receiving expected future income) There are various methods for determining the cash flow discount rate. For cash flow for equity: capital asset pricing model; cumulative construction model; For cash flow for all invested capital: weighted average cost of capital model. Weighted average cost of capital refers to the costs associated with attracting equity and borrowed capital. The weighted average cost of capital will depend both on the costs per unit of attracted equity and borrowed funds, and on the shares of these funds in the company’s capital. WACC is calculated using the following formula:

where W зк, W ск – shares of debt and equity capital, respectively, in the capital structure of the enterprise; Ezk – rate of return on borrowed capital:

where k зк – cost of attracting borrowed capital (interest on loan); t c – corporate profit tax rate (profit tax); E sk – rate of return on equity capital, can be calculated by the CAPM method or cumulative construction:

where k p , k s – the cost of attracting share capital, respectively, for preferred and ordinary shares; W р, W s – the share of shares in the capital structure of the enterprise, respectively, preferred and ordinary.

From formulas (23)–(25) it follows that

37. Advantages: Costly: 1) Takes into account the influence of production and economic factors on changes in the value of assets. 2) Gives an assessment of the level of technology development taking into account the wear and tear of assets. 3) Calculations are based on valid financial documents, so they are more reliable. Profitable: 1) Takes into account the ratio of income and expenses in the future. 2) Takes into account the level of risk. 3) Takes into account the interests of the investor Comparative: 1) Based on real data characterizing the current state of the market. 2) Reflects the existing practice of buying and selling a business. 3) Takes into account the influence of industry and regional factors on the value of a business. Disadvantages: Expensive: 1) Reflects the value in the past, and not in the present period. 2) Does not take into account the market situation on the valuation date. 3) Does not take into account business development prospects. 4) Static. 5) Does not take into account connections with current and future business results. Profitable: 1) The complexity of calculations for making forecasts of income and expenses. 2) When searching for the rate of return, calculations can give several options. 3) Does not take into account market conditions Comparative: 1) Does not always take into account the organizational, technical and financial features of the business. 2) Only retrospective information is involved in the calculations. 3) For an objective result, the calculation of a large number of amendments and reservations is required. 4) Does not take into account the future expectations of investors.

Ticket 19. Comparative approach to enterprise value assessment The comparative approach is a set of methods for estimating the value of a valuation object, based on comparison of the valuation object with similar objects, in relation to which there is information about the prices of transactions with them.

The comparative (market) approach is based on the principle of substitution - the buyer will not buy an enterprise if its cost exceeds the cost of purchasing a similar object on the market that has the same utility.

Object of assessment: market of similar enterprises.

Assessment methods: 1. Capital market method based on the real prices of shares of public enterprises prevailing on the stock market. The basis for comparison is the price per unit share of a joint stock company. Used to value non-controlling interest.

2. Transaction method- for comparison, data is taken on sales of controlling stakes in companies or on sales of entire enterprises, for example, during acquisitions or mergers. The method is used when purchasing a controlling stake in a public company, as well as to evaluate closed companies that operate in the same market segment as open ones and have similar financial indicators. Includes analysis of multiples.

3. Industry coefficient method- The method of industry coefficients allows you to calculate the estimated value of a business using formulas derived on the basis of industry statistics. The method of industry coefficients, or the method of industry ratios, is based on the use of recommended relationships between price and certain financial parameters. Industry ratios are usually calculated by special analytical organizations on the basis of long-term statistical observations of the relationship between the price of an enterprise's equity capital and its most important production and financial indicators. Advantages: gives the most objective assessment of the market value of the enterprise.

Flaws: Requires a significant amount of quality information. If these requirements are not met, the objectivity of the assessments is significantly reduced. It is difficult to find analogue enterprises; the development prospects of the enterprise are not taken into account. Difficulty in obtaining reliable information. It is necessary to make significant adjustments due to the strong differences between enterprises.

2.(13.) Discounted cash flow method. The discounted cash flow (DCF) method allows you to evaluate an object in case of receiving unstable cash flows from it, modeling the characteristic features of their receipt. The DCF method is used when: it is assumed that future cash flows will differ significantly from current ones; income and expense flows are seasonal; The property being assessed is a large multifunctional commercial facility; The DCF method estimates the value of real estate based on the present value of income, consisting of projected cash flows and residual value.

Liquidation value is determined in the event of compulsory liquidation of the company.

Liquidation value means the net amount that an owner can receive when a company is liquidated and its assets are sold separately.

Liquidation value depends on the nature of the liquidation.

Where an orderly liquidation is possible, the sale of assets can be carried out over a reasonable period of time to ensure that each asset receives the highest possible price. Compulsory liquidation (involves selling assets as quickly as possible.

When calculating liquidation value, it is important to be realistic about the costs associated with liquidating assets. When calculating liquidation value, it is necessary to discount the expected proceeds from the sale of assets at a rate that takes into account the risk associated with liquidation. The base period is the date of valuation of the company.

The liquidation value is determined on the basis of the current market value of the company's assets, taking into account the time of their sale according to the calendar schedule for liquidation of assets (Fig. 5.4).

To calculate the current value of an enterprise's assets, data from the enterprise's balance sheet as of the valuation date are used, taking into account inventory and adjustments to the value of individual assets, the market value of which does not coincide with the balance sheet value.

The issue of the best and most effective use of the liquidated business must first be resolved, which will make it possible to apply sound marketing methods.

Rice. 5.4. Scheme for determining the value of a company based on the liquidation value method

night valuation of machinery, equipment, vehicles, buildings and structures, intangible assets.

Based on an analysis of the location of the facility, the development of infrastructure, the nature and deterioration of real estate, and legislative restrictions on the use of property, the option of dismantling and selling equipment, vehicles, and supplies was adopted as the most appropriate option. Production and warehouse premises can be used by the new owner as a warehouse complex.

The buyer receives the rights to rent a plot together with the rights to real estate (Civil Code of the Russian Federation, Article 271 “Right to use a land plot by the owner of real estate”). The balance sheet indicators were adjusted by the appraiser for the following items (Table 5.5).

Table 5.5

Market valuations of liquidated assets, thousand rubles. Assets Code

Balan lines

Art. Rynoch

ARTICLE 1 2 3 4 1. Real estate 122 1729 1 199 2. Equipment 122 784 1 150 3. Vehicles 122 900 1212 4. Construction in progress 122 423 229 5. Sunflower seed reserves 211 600 728 6, Other raw material reserves, materials and similar assets 211 363 363 7. Inventories of finished products 214 40 40 B. Accounts receivable 240 1,590 1,590 E. Cash 260 29 29 Cost of liquidated property 6,540 Fixed assets (line 122 of the balance sheet asset) include 12 objects real estate. The book value is 1,729 thousand rubles. The cost of vehicles, machinery and equipment is 1,684 thousand rubles.

The composition of real estate objects includes non-production objects, which, in accordance with paragraph 4 of Art. 104 of the Federal Law “On Insolvency (Bankruptcy)” are subject to gratuitous transfer to local government bodies. The book value of such objects amounted to 185 thousand rubles. As a result, the book value of real estate subject to sale amounted to RUB 1,544 thousand. (1 729 - 185).

In the process of inventory, technical examination of real estate, study of market conditions for the sale of this type of property, the appraiser came to the conclusion that the book value of fixed assets is higher than their market value. Applying the full replacement cost method, taking into account all types of depreciation, the appraiser determined the market value of real estate assets - 1,199 thousand rubles.

To assess the market value of machinery and equipment, the appraiser identified vehicles as more liquid than equipment. (This will be reflected in the asset sales schedule below.)

The book value of equipment is 784 thousand rubles, and vehicles - 900 thousand rubles. The market value of these assets, calculated on the basis of the market approach, amounted to RUB 1,150 thousand, respectively. and 1,212 thousand rubles.

Unfinished construction is estimated at 229 thousand rubles. compared to the book value of 423 thousand rubles. At the same time, the appraiser took into account the technical condition of the structures, wear and tear under the influence of natural and climatic factors.

As part of the reserves of raw materials, material and other similar assets, the appraiser gave a market valuation of sunflower seed reserves, since in the appraiser’s opinion, as of the valuation date it was underestimated: the market value of the reserves is 728 thousand rubles. compared to book value - 600 thousand rubles. Other inventories of raw materials, material and other similar assets, as well as finished products are valued at book value.

Adjusted value of property Periods, months Total joint venture

"SG 15901 SP

SO 5567.5 SCHI SP

cm 1 1 1 1590 1 1918.9 O

SP 99.9 3.0 0.720 SP se SP

o 5’ o> SP

8? 3.0 0.764 co

se 78.6 G" - SP

SM 3.0 10.836 g-*-

about 258.7 with joint venture

SP SP § cm 816.6 o

o* 746.6 em joint venture

?^g cm 816.6 s?

s5 769.2 - SP

SM 1613.6 se

Real estate 2. Equipment 3. Vehicles 4. Construction in progress 5. Stocks of sunflower seeds

from 7. Finished goods inventories 8. Accounts receivable 9. Cash 10. Total cash inflow 55

from 14. Total current value of liquidated property

As part of the receivables, the analysis process revealed bad debts from buyers and customers in the amount of 452 thousand rubles. As a result, accounts receivable, for which cash receipts are expected within 12 months, amount to 1,590 thousand rubles. (2 043-453).

As a result, the market value of the enterprise’s property is 6,540 thousand rubles.

The transition to the liquidation value of an enterprise requires taking into account the costs of selling property, dismantling equipment, transportation costs, costs of maintaining inventories, management costs, the cost of intermediary real estate, appraisal and legal services, taxes, fees, possible discounts during the sale process, and the costs of holding auctions. The most correct way to calculate upcoming liquidation expenses is based on the estimate. In some cases, you can rely on the accumulated market experience of selling this type of property under similar conditions (Table 5.8),

Table 5.8

Liquidation costs for the object (as a percentage of the market value of assets), thousand rubles. Property Market

Art. Liquidation.

costs 1. Real estate 1199 10 119.9 2. Equipment 1150 15 172.5 3. Vehicles 1 212 7 84.8 4. Construction in progress 229 12 27.5 5. Sunflower seed reserves 728 2 14.6 6. Other inventories of raw materials 363 5 18.1 7. Inventories of finished products 40 5 2.0 8. Accounts receivable 1590 5 79.5 9. Cash 29 - - Administrative expenses for the liquidation of the enterprise are estimated to be 28 thousand rubles. per month. Severance payments to employees amounted to a total of 51.8 thousand rubles.

The schedule for the sale of the enterprise's assets is drawn up taking into account the degree of their liquidity in the actual economic conditions. In addition, legal restrictions on the sale of property of a liquidated enterprise should be taken into account (Table 5.9),

Table 5.9 Schedule for the sale of enterprise assets Property, Implementation period,

months 1, Real estate 12 2. Equipment 6 3. Vehicles 3 4. Construction in progress 12 5. Sunflower seed stocks 1 6. Other raw materials stocks 3 7. Finished goods stocks 1. 8. Accounts receivable 12 9. Cash 1 The asset sales schedule allows you to determine the current market value of the property being sold, taking into account the different times in which funds are received from the sale of property. For this purpose, it is necessary to adjust the amount of cash receipts using a mechanism for discounting proceeds from the sale of property. In this case, we will proceed from the assumption that for the entire period of sale of individual groups of assets, income will be generated evenly over the months, and that funds will be received at the end of the month. The exception is the sale of unfinished construction.

To calculate the discount rate, a cumulative construction method was adopted, which allows taking into account all the risks of investments in the property being sold, risks associated with management, etc. In this example, a discount rate of 3% is used to calculate discounted cash flows.

Discounted cash flows (DCF) will be calculated using the formula:

(1 + k)t (1 + k)t

where RU - monthly cash flows from the sale of property, in accordance with the established schedule;

r - monthly discount rate; t - number of discounting periods per year, month (tn = 12).

Liquidation costs also require adjustment, but the process will be reversed: it is necessary to determine the increasing cost of cash to maintain costs at a level sufficient to liquidate the enterprise. Adjusted cash outflow (CF) is determined by the formula:

py>t = py(1 + r)t,

where (1 + g U" is the compound factor; r is the interest on capital;

RU - current cash flow;

t - number of periods of property sale, months. (771 = 12).

Based on the adjustments made in tables 5.6, 5.7, we can determine the liquidation value of the enterprise, which is 4,555.3 thousand rubles. (5,567.5 - 1,012.2).

Stretch ceiling