Asset valuation

Safety auditors should collect the following financial information relating to safety input (1) If there is safety assets (2) Safety spending does take place (3) Safety assets are owned by the audited entity (4) Structural condition of safe assets (5) Safety assets records are complete (6) The safety asset valuation is appropriate (7) Ending balance of safe assets is correct (8) Disclosure of safety assets in the accounting statements is appropriate ... 

Accountants use various methods of asset valuation. The method chosen to value an asset influences what is stated within the categories on the balance sheet. For this reason, it is necessary to knowwhich valuation method is used before any inference from financial analysis can be made. Assets are typically valued at cost or fair market value. Simply put, cost is how much the company paid to acquire the asset, which includes all the costs related to purchasing an asset. Contrastingly, fair market value is how much the company could receive if the asset is sold. 

This chapter explained some of the finer details of financial statements. It started with an ei lanation of asset valuation. Assets included property, plant, and equipment (PP E) because they are the most... 

JV would compete with core businesses of the partners Valne of tangible and intangible assets brought to the JV are difficult to valuate fairly... 

One of the most contentious issues in business development is valuation. In truth there is no method which will provide a correct value. Value can only be accurately gauged when an asset is realized. Between the invention of an idea for a product or company and the eventual sale, no matter what method is chosen to act as a surrogate for the real value, intangible elements will remain and confound the accuracy of any valuation. Even when an asset is sold the price paid may not match its expected value. 

An enterprise value of a product or company is probably the most common benchmark for valuation in that it represents the sum of the values of an asset, for a product these might be sales, IP rights, manufacturing capacity, inventory and trademarks. Each of these can be assigned a nominal value and be adjusted... 

The way to estimate strategic value in the financial sense, in other words the premium paid beyond the enterprise value, is probably the valuation issue which is least amenable to any form of method or systematic analysis. Although previous transactions from external benchmarking or from the company s own experience may give some kind of lead, even if there is true comparability between the benchmark and the valuation subject, differences in market conditions from one day to the next will often have major influences on the price of an asset. The acquisition of Hexal by Novartis Sandoz generic division in 2006 was widely criticized at the time as being too costly, yet immediately thereafter Teva bought Ivax to re-establish their market position... 

In the valuation phase, a value is placed on the asset for licensing, opportunity pri-... 

The present value of an asset may be defined as the value of the asset in its condition at the time of valuation. There are several different types of present values, and the standard meanings of the various types should be distinguished. 

We believe that the visible successes of Cain, Huntsman, and a few other industry insiders (e.g., George Harris, Hal Sorgenti) have in recent years attracted a lot of imitators, especially financial buyers, into the chemicals sector (Fig. 8.1). Industry observers point out that given the low public valuations of chemical assets and the unprecedented levels of uninvested funds available today (shown in Fig. 8.2), chemical businesses make ideal LBO targets. Their logic is that the basic industrial sectors, such as chemicals, have reasonably predictable cash flows, unlike the... 

Prospective assessments that use success measures such as extent of diffusion or commercialization avoid the problem of determining net social benefits for alternative courses of action, but this, of course, omits the explicit valuation of the outcomes of those alternatives. Such studies are much less useful as policy assessments because they do not present findings that enable one to determine whether the government is justified (from a full social benefits perspective) in undertaking a particular action. Further, they are more difficult to replicate and, therefore, may be less credible to some audiences. For other audiences, this may be an asset the use of historical data and analysis by analogy can lend credence because of the close tie to actual experience. 

Another very popular definition of risk is through the risk premium or beta. This is defined as the slope of the curve that gives market returns as a function of S P 500 Index returns in other words, comparing how the investment compares with the market. The concept of beta (the slope of the curve) is part of the capital asset pricing model (CAPM) proposed by Lintner (1969) and Sharpe (1970), which intends to incorporate risk into valuation of portfolios and it can also be viewed as the increase in expected return in exchange for a given increase in variance. However, this concept seems to apply to building stock portfolios more than to technical projects within a company. 

Lintner J. 1969. The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. Rev. Econ. Stat., 51(2), 222-224. 

All valuation models must capture a process describing the dynamics of the asset price. This was discussed at the start of the chapter and is a central tenet of derivative valuation models. Under the Black-Scholes model for example, the price dynamics of a risk-bearing asset St under the risk-neutral probability function Q are given by... 

In the following chapter, we tie in the work on dynamics of asset prices to option valuation models. 

Following the risk neutral theory, the credit spread is not included into option valuation because it is independent from the default risk of the underlying asset. The inclusion of credit spread overvalues the option. 

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