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investingforbeginners.eu Many of the biggest and most far-reaching investments we make in our lives are investments that have little or nothing to do with money.
Daniel Quinn

Investment Dictionary


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Asset Valuation

 

The specifics of asset valuation depend on particular asset class. However, the main valuation methods are the same for all assets. The mostly used methods are relative valuation and DCF valuation. Relative valuation is easier to implement but DCF valuation is more detailed also more resistant to market fluctuations. In other hand relative valuation is more realistic and practical. 

 

The full business valuation would require both methods to verify each other. Only the valuation professionals can chose the best valuation method and make all the calculations properly. There is a lot of knowledge about business specifics needed to get real market value of the asset. 

 

As there might be different asset classes, valuation of assets mostly often is classified as this: 

  • Business valuation
  • Real estate valuation
  • Valuation of cars, ships, airplanes and other machinery
  • Valuation of other assets

 

Despite the asset class methods that are used for valuation are similar, and the chosen method will mostly depend on few characteristics:

  • Is this asset generating the cash flow?
  • Are there a lot of comparable assets on the market?
  • Is it easy to replace this asset and maintain the same quality characteristics?

 






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