Below are some of the key terms of the valuation industry, meticulously translated by the Valutico team. As we serve clients in nearly 30 countries, we strive to offer a platform and deliverables that fit withe the local needs of every customer. Interested in adding a new language to our platform, contact us!
Definition : A market characterized by frequent and high-volume transactions, ensuring continuous availability of pricing information for assets or liabilities
Definition : A multivariate model used to estimate the cost of equity capital by including multiple systematic risk factors.
Definition : See firm-specific risk for the definition of Alpha.
Definition : A method for determining the value of a business, or a business interest, by summing the net values of its individual assets and liabilities. Since the assets and liabilities are valued using market, income, or cost approaches, this method is not considered a unique valuation approach.
Definition : (1) The procedure for determining the value of an asset or liability; OR (2) The value given as an opinion or estimate.
Definition : A declaration of the essential assumptions underlying a valuation.
Definition : A reduction in the current market price of a publicly traded stock, applied by market participants to account for the lower per-share value of a large block of stock that cannot be sold quickly due to normal trading volume limitations.
Definition : The level of uncertainty regarding the attainment of anticipated future profits for a business, influenced by factors aside from financial leverage.
Definition : An indicator of a stock's systemic risk, reflecting how its price tends to move in relation to a particular index.
Definition : The value of an asset as recorded in an entity's financial statements, calculated by subtracting any accumulated depreciation and impairment losses from its original cost.
Definition : A metric that quantifies the systemic risk of a stock, indicating how its price fluctuations align with changes in a specific market index.
Definition : An entity engaged in commercial, industrial, service, or investment activities, or a combination thereof, for the purpose of generating economic value.
Definition : Capital expenditures for acquiring, upgrading, and maintaining physical assets such as property, industrial buildings, or equipment.
Definition : The value of an asset recorded on the balance sheet, calculated by subtracting accumulated depreciation and impairment losses from the asset's original cost.
Definition : Comparable Company Analysis, or Comps, entails determining valuation multiples from similar publicly traded companies and using these multiples to assess the financials of the company being valued.
Definition : A charge representing a fair return on, or return of, contributory assets that are utilized in generating the cash flows associated with the intangible asset being valued.
Definition : A valuation method grounded in the economic concept that a purchaser will not pay more for an asset than the cost to acquire an asset with similar utility, whether through purchase or construction.
Definition : A statistical metric indicating the degree of variability between two random variables observed or measured over the same period of time.
Definition : Debts or obligations that are expected to be settled within one year.
Definition : The Capital Asset Pricing Model (CAPM) is the most commonly utilized model for calculating the cost of equity capital, linking risk and expected return.
Definition : Cash and assets that are readily convertible to cash, such as bank accounts, marketable securities, and other short-term investments.
Definition : The process by which an asset produces earnings, which are subsequently reinvested to generate additional earnings. In essence, compounding means earning returns on previously earned returns.
Definition : Refers to tangible or intangible assets involved in generating the cash flows associated with the intangible asset being valued.
Definition : The anticipated rate of return demanded by the market to incentivize investment in a specific venture.
Definition : The potential for financial loss arising from one party's failure to fulfill an obligation in a contract, affecting the other party.
Definition : A valuation method that determines the value of a business by capitalizing its expected earnings, reflecting the present value of future income streams.
Definition : The cash produced by an asset, group of assets, or a business over a specific period. It is typically used with a descriptive term or phrase.
Definition : An additional amount or percentage representing the premium paid for a controlling interest in a business enterprise, surpassing the value of a non-controlling interest, reflecting the authority and influence associated with control.
Definition : The interest rate a company pays on its debt, representing the expense associated with borrowing funds.
Definition : Cash and assets that are anticipated to be converted into cash or consumed within one year during the normal operations of a business.
Definition : Capital expenditures for acquiring, upgrading, and maintaining physical assets such as property, industrial buildings, or equipment.
Definition : The value of an asset recorded on the balance sheet, calculated by subtracting accumulated depreciation and impairment losses from the asset's original cost.
Definition : Comparable Company Analysis, or Comps, entails determining valuation multiples from similar publicly traded companies and using these multiples to assess the financials of the company being valued.
Definition : A charge representing a fair return on, or return of, contributory assets that are utilized in generating the cash flows associated with the intangible asset being valued.
Definition : A valuation method grounded in the economic concept that a purchaser will not pay more for an asset than the cost to acquire an asset with similar utility, whether through purchase or construction.
Definition : A statistical metric indicating the degree of variability between two random variables observed or measured over the same period of time.
Definition : Debts or obligations that are expected to be settled within one year.
Definition : The Capital Asset Pricing Model (CAPM) is the most commonly utilized model for calculating the cost of equity capital, linking risk and expected return.
Definition : Cash and assets that are readily convertible to cash, such as bank accounts, marketable securities, and other short-term investments.
Definition : The process by which an asset produces earnings, which are subsequently reinvested to generate additional earnings. In essence, compounding means earning returns on previously earned returns.
Definition : Refers to tangible or intangible assets involved in generating the cash flows associated with the intangible asset being valued.
Definition : The anticipated rate of return demanded by the market to incentivize investment in a specific venture.
Definition : The potential for financial loss arising from one party's failure to fulfill an obligation in a contract, affecting the other party.
Definition : A valuation method that determines the value of a business by capitalizing its expected earnings, reflecting the present value of future income streams.
Definition : The cash produced by an asset, group of assets, or a business over a specific period. It is typically used with a descriptive term or phrase.
Definition : An additional amount or percentage representing the premium paid for a controlling interest in a business enterprise, surpassing the value of a non-controlling interest, reflecting the authority and influence associated with control.
Definition : The interest rate a company pays on its debt, representing the expense associated with borrowing funds.
Definition : Cash and assets that are anticipated to be converted into cash or consumed within one year during the normal operations of a business.
Definition : A valuation method that calculates the present value of expected future cash flows generated by an asset or investment opportunity, incorporating the time value of money.
Definition : Acquiring funds for a business by borrowing money through loans or issuing bonds.
Definition : The chance that a counterparty will fail to fulfill its obligations.
Definition : Discount for lack of control refers to a reduction in the value of an equity interest in a business, typically represented as a percentage, which accounts for the absence of certain or all controlling powers over the business.
Definition : Discount for lack of liquidity refers to a reduction in the value of an asset or investment, often expressed as a percentage, due to the difficulty or inability to quickly convert the asset into cash without significantly affecting its price.
Definition : Discount for lack of marketability refers to a decrease in the value of an asset or investment, usually represented as a percentage, due to the limited ability to sell the asset quickly and at fair market value.
Definition : The discount rate is the percentage used to determine the current value of a future cash flow through discounting.
Definition : The Discounted Cash Flow (DCF) valuation approach is a method for assessing the value of a company by considering the time value of money. It involves estimating all future cash flows and then discounting them to their present values. The total of these discounted cash flows, including both inflows and outflows, represents the net present value (NPV), which is regarded as the value or price of the cash flows under consideration.
Definition : Discounting is the method used to ascertain the current value of future cash flows or payments by considering the time value of money.
Definition : Discounting methods refer to various approaches or techniques used to calculate the present value of future cash flows or payments by considering factors such as the time value of money and risk.
Definition : Diversifiable risk, also known as firm-specific risk, refers to the portion of risk within an investment portfolio that can be eliminated through diversification.
Definition : Dividends are portions of a company's earnings that are distributed to a specific group of its shareholders as a form of return on their investment.
Definition : The Dividend Discount Model (DDM) valuation approach is a method used to estimate the intrinsic value of a stock by discounting its expected future dividend payments back to their present value.
Definition: EBIT stands for Earnings Before Interest and Taxes. It represents a company's operating profit before deducting interest expenses and taxes.
Definition: EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization. It represents a measure of a company's operating performance, excluding certain expenses such as interest, taxes, depreciation, and amortization.
Definition: Economic life refers to the complete duration during which an asset is anticipated to provide economic advantages for one or more users.
Definition: Economic obsolescence occurs when external factors, particularly shifts in supply or demand for products generated by the asset, lead to a depreciation in its value due to a decrease in its usefulness.
Definition: Enterprise Value (EV), also known as Total Enterprise Value (TEV), Entity Value, or Firm Value (FV) is a measure reflecting the market value of a whole business. It is the sum of claims of all the security-holders: debt holders, preferred shareholders, minority interest, common equity holders, and others.
Definition: Enterprise value multiples are ratios utilized for evaluating the worth of a company. They consider the company from the perspective of a potential buyer, incorporating debt, unlike other multiples such as the P/E ratio. An example of an enterprise value multiple is EV/EBITDA.
Definition: The entity approach involves assessing the value of an entity or company as a whole, considering all its assets, liabilities, and potential future cash flows.
Definition: Entity-specific factors are characteristics or conditions that are unique to a particular entity and are not readily accessible to the broader market participants.
Definition: Entity value refers to the overall worth or valuation of a business or organization, typically assessed by considering its assets, liabilities, potential future earnings, and other relevant factors.
Definition: Equity represents the residual interest in the assets of an entity after deducting liabilities. It's also known as shareholders' equity or net worth, calculated as total assets minus total liabilities.
Definition: The equity approach involves assessing the value of an entity primarily based on its shareholders' equity or net worth, considering assets and liabilities.
Definition: Equity financing refers to the capital raised by a business through the issuance of shares to its owners or investors.
Definition: An equity instrument is a contract that grants a residual claim on an entity's assets after all liabilities have been subtracted.
Definition: Equity multiples are ratios utilized to assess the value of a company's equity. An example of an equity multiple is the price-to-earnings ratio.
Definition: Equity Risk Premium: Refer to the definition of Risk Premium for an explanation of Equity Risk Premium.
Definition: Equity Value: The worth of a business as perceived by all its shareholders.
Definition : Equity-based multiples are financial ratios that assess a company's equity value relative to specific financial metrics.
Definition : EV-based multiples are financial ratios that evaluate a company's enterprise value in relation to certain financial metrics.
Definition : EV/EBIT: This multiple is defined as the enterprise value divided by earnings before interest and tax.
Definition : EV/EBITDA: This multiple is calculated by dividing the enterprise value by earnings before interest, tax, depreciation, and amortization.
Definition : EV/Sales: This multiple is defined as the enterprise value divided by sales, also referred to as revenue or turnover.
Definition : Excess Earnings refer to the surplus of expected economic gains over a suitable rate of return on the value of a chosen asset base, typically net tangible assets, which are employed to generate those anticipated economic gains.
Definition : Exit price is the amount that would be received upon selling an asset or paid to transfer a liability.
Definition : Expected Negative Exposure refers to the present value of anticipated payments and unrealized losses that an entity foresees paying to a counterparty.
Definition : Expected Positive Exposure is the present value of anticipated receipts and unrealized gains that an entity expects to receive from a counterparty.
Definition : External Obsolescence refers to a reduction in the usefulness of an asset due to economic or locational factors external to the asset itself, leading to a decrease in its value.
Definition : External sources encompass factors such as market value declines, adverse shifts in technology, market conditions, economic changes, or legal regulations, as well as increases in market interest rates. Additionally, it includes scenarios where the net assets of a company exceed its market capitalization.
Definition : An external valuer is an evaluator who is independent of the owner or manager of an asset.
Definition: Fair value is the amount that would be obtained from the sale of an asset or paid to transfer a liability in a transaction conducted under normal market conditions between willing buyers and sellers, as of the measurement date.
Definition: A fairness opinion provides an assessment of whether the financial terms of a proposed corporate transaction are equitable for the equity holders of the entity in question.
Definition: A financial instrument is a formal agreement that establishes rights or obligations between specific parties, involving the exchange of cash, financial assets, or other monetary considerations, including equity instruments.
Definition: Financial reporting standards, also known as accounting standards, are established guidelines or regulations that dictate the preparation of periodic financial statements for an entity, outlining its financial position.
Definition: Financial risk refers to the level of uncertainty regarding the attainment of anticipated future returns for a business, stemming from its financial leverage.
Definition: A financial statement is a regular report that presents an entity's financial position at a specific point in time.
Definition: Financing mix refers to the combination or proportion of various sources of financing utilized by a company to fund its operations and investments.
Definition: Firm Value: Refer to the definition of Enterprise Value for an explanation of Firm Value.
Definition: Firm-specific risk, also known as unsystematic risk, specific risk, diversifiable risk, or alpha, encompasses risks associated with various aspects of a firm such as its management team, operations, projects, products, and profits.
Definition: Free Cash Flows to Equity (FCFE) represent the cash flow that is accessible for distribution to equity holders. When net borrowings remain constant, the formula for FCFE is derived from subtracting Interest Expense multiplied by (1 minus Tax Rate) from Free Cash Flows to the Firm.
Definition: Free Cash Flows to the Firm (FCFF) is the cash flow available for distribution among all stakeholders of an organization, including debt holders and equity holders. The typical formula for FCFF is EBIT multiplied by (1 minus Tax Rate), plus Depreciation & Amortization, plus or minus Changes in Working Capital, minus Capital Expenditure. It can also be known as unlevered free cash flow.
Definition: The Free Cash Flow to Equity (FCFE) approach is a method used to determine the cash flow available for distribution to equity holders.
Definition: Functional obsolescence refers to a decrease in the usefulness or value of an asset due to inefficiencies in comparison to its replacement, resulting in a loss of value.
Definition: Gearing, also known as leverage or gearing ratio, refers to the level of debt a company utilizes in its capital structure compared to its equity.
Definition: Gross Debt refers to the total amount of interest-bearing debt, encompassing both current and long-term liabilities.
Definition: Going Concern refers to the expectation that a business entity will continue its operations in the foreseeable future.
Definition: Goodwill is the intangible asset representing the future economic benefits derived from the reputation, customer loyalty, and other non-separable aspects of a business or asset group.
Definition: Highest and best use refers to the optimal utilization of a non-financial asset by market participants, aiming to maximize the value of the asset or the overall group of assets and liabilities, such as a business, in which the asset would be employed.
Definition: An impairment loss occurs when the carrying amount of an asset or cash-generating unit exceeds its recoverable amount.
Definition: "In perpetuity" or "perpetual" denotes something that continues indefinitely, without any predefined end.
Definition: The income approach is a valuation method that estimates the value of an asset by converting its future cash flows into a present capital value.
Definition: Initial Yield refers to the percentage obtained by dividing the initial income generated from an investment by the price paid for the investment.
Definition: An intangible asset is a non-monetary asset characterized by its economic value, despite lacking physical substance. It provides rights and economic benefits to its owner.
Definition: The interest rate on debt, used to calculate cash flows, refers to the percentage charged by a lender on the principal amount borrowed, determining the cost of borrowing for the debtor.
Definition: The Internal Rate of Return (IRR) is the discount rate at which the present value of the future cash flows from an investment equals the initial investment cost.
Definition: Internal sources pertain to factors such as obsolescence, physical damage, idleness of assets, restructuring efforts, or assets held for disposal. They also encompass instances of poorer than anticipated economic performance. Moreover, in the context of investments in subsidiaries, joint ventures, or associates, internal sources may include cases where the carrying amount of the investment exceeds the carrying amount of the investee's assets, or when dividends surpass the total comprehensive income of the investee.
Definition: Invested Capital refers to the total amount of equity and debt invested in a business entity. Debt can encompass either all interest-bearing debt or specifically long-term, interest-bearing debt. It's important to provide additional context or qualifying words when using this term.
Definition: Investment Property refers to land, buildings, or parts of buildings that are owned with the primary purpose of earning rental income or capital appreciation, rather than for use in the production or supply of goods or services, for administrative purposes, or for sale in the ordinary course of business.
Definition: Investment Value refers to the value of an asset to the owner or a prospective owner for individual investment or operational objectives.
Definition: Levered Beta is a measure of beta that considers the impact of debt in the capital structure.
Definition: Liquidation value represents the net amount expected to be realized if a business is dissolved and its assets are sold off individually. It's crucial to specify the bases of value and any relevant additional assumptions.
Definition: Loss Given Default (LGD) refers to the percentage of the outstanding amount that a party anticipates losing if the counterparty fails to fulfill its financial obligations.
Definition: Market capitalization, or market cap, is calculated by multiplying the current share price of a publicly traded company by the total number of outstanding shares.
Definition: Market participants refer to all individuals, companies, or other entities actively engaged in transactions or considering entering into transactions involving a specific type of asset.
Definition: Market rent is the projected value at which a real property interest should be leased on the valuation date, reflecting a transaction between a willing lessor and a willing lessee under appropriate lease terms. This value is determined in an arm's length transaction, following proper marketing efforts, and where both parties act with knowledge, prudence, and without coercion.
Definition: Market Risk, also known as systematic risk, non-specific risk, non-diversifiable risk, or beta, encompasses factors such as interest rates, economic cycles, inflation, legislation, and socio-economic developments.
Definition: The market risk premium refers to the additional return expected by investors for taking on the inherent risks of investing in the broader market compared to risk-free investments.
Definition: Market value represents the estimated price at which an asset or liability would exchange between willing buyers and sellers in an arm's length transaction, conducted with proper marketing efforts, and where both parties act with knowledge, prudence, and without coercion.
Definition: The market value of debt represents the current estimated worth of a company's debt instruments, considering their trading prices in the market.
Definition: A modern equivalent asset is an asset that serves a similar function and provides equivalent utility as the asset being valued. However, it is constructed or made using current materials, techniques, and designs.
Definition: The most advantageous market refers to the market that maximizes the amount received when selling an asset or minimizes the amount paid when transferring a liability, considering transaction costs and transportation costs.
Definition: The Multiples Valuation Approach is a method of valuation that operates on the principle that comparable assets tend to sell at similar prices. It relies on the assumption that the ratio comparing the value of a company to a specific firm-specific variable, such as operating margins or cash flow, remains consistent across similar firms.
Definition: Net debt is calculated by subtracting cash, cash equivalents, and marketable securities from all interest-bearing debt (often referred to as gross debt). This calculation assumes that cash and marketable securities are surplus or redundant and can be used to pay down debt. However, it's crucial to evaluate whether all cash, cash equivalents, and marketable securities are genuinely surplus or readily disposable in practice.
Definition: Net income, also known as net profit or net earnings, represents the total amount of income earned by a company after deducting all expenses, taxes, interest, and other deductions from its total revenue.
Definition: Net Operating Profit After Tax (NOPAT) is the after-tax operating profit of a company that is available to all investors, including both shareholders and debt holders.
Definition: Net Present Value (NPV) is calculated as the sum of the present values of all future cash flows over a specific period of time.
Definition: Nominal cash flows represent the cash inflows or outflows expressed in monetary terms over a specific period or series of periods.
Definition: Non-current assets are resources held by a company for long-term use in its operations, such as property, plant, and equipment, and are not intended for sale within the normal operating cycle of the business.
Definition: Non-diversifiable risk, also known as market risk, refers to the portion of risk inherent in an investment that cannot be mitigated through diversification.
Definition: Non-operating assets are asset classes that are not vital for the day-to-day operations of a business but may still yield income or contribute to the return on investment.
Definition: Non-specific risk, also known as market risk, refers to the portion of risk inherent in an investment that cannot be mitigated through diversification.
Definition: Normalized earnings refer to the adjusted earnings of a company, accounting for non-recurring items, depreciation discrepancies, profit or loss on asset sales, and other factors, aiming to present a more accurate reflection of the company's ongoing performance.
Definition : Obsolescence refers to the reduction in the utility or value of an asset due to factors such as physical deterioration, technological advancements, shifts in demand patterns, or changes in the environment.
Definition : A peer group refers to a set of companies or entities that are comparable to the subject company in terms of industry, size, financial performance, or other relevant characteristics.
Definition : Physical obsolescence occurs when an asset or its components deteriorate over time due to age and normal usage, leading to a loss of utility and ultimately a decline in value.
Definition : Plant and equipment refer to a category of tangible assets held by an entity for various purposes, including use in production or service provision, rental to others, or administrative functions. These assets are expected to be utilized over a period of time.
Definition : A portfolio is a collection of diverse assets or liabilities held or managed by a single entity.
Definition : Precedent Transaction Analysis, also known as Precedents, involves examining recent acquisitions within the same industry sector and applying the valuation multiples derived from these transactions to the financial metrics of the company being assessed.
Definition : The present value of future cash flows refers to the current worth of a series of cash flows expected to be received or paid out over time, taking into account the time value of money through discounting.
Definition : The price to book multiple is defined as the market capitalization (or equity value of common shares) divided by the book value of equity which is total common shareholders’ equity excluding preference shares and minority interest.
Definition : The Price to Earnings (P/E) ratio, also known as the Price-Earnings Multiple, is calculated by dividing the market capitalization (or equity value of common shares) by the earnings attributable to common shareholders.
Definition : The principal market refers to the market where an asset or liability experiences the highest volume and level of activity.
Definition : Prospective financial information refers to forecasted financial data utilized for estimating cash flows in a discounted cash flow model.
Definition : Rate of return is the amount of income (or loss) and/or change in value that is realized or expected from an investment, expressed as a percentage of the investment.
Definition : Real Cash Flows are nominal cash flows that have been adjusted to remove the effects of price changes over time.
Definition : An impairment loss is recognized whenever the recoverable amount of an asset is less than its carrying amount.
Definition : The recoverable amount is the greater of an asset's fair value minus costs to sell (sometimes called net selling price) and its value in use.
Definition : Transactions involving similar assets or businesses that are used as benchmarks to value a subject asset or business.
Definition : The present cost of acquiring a comparable asset that provides the same utility.
Definition : The expected rate of return that investors demand for investing in an asset or a project.
Definition : Use the same process as identifying impaired assets: at each balance sheet date, determine if there is evidence that an impairment loss has decreased. If such evidence exists, calculate the recoverable amount.
Definition : The additional return that the overall stock market offers above the risk-free rate.
Definition : Analysts typically use the yield on government bonds to estimate the risk-free rate, acknowledging that true risk-free rates are nearly impossible to obtain.
Definition : A royalty is a payment made for the use of an asset, often an intangible asset or a natural resource.
Definition : Sales represent the total amount of goods or services sold by a company during a specific period.
Definition : A special assumption is an assumption that deviates from the actual conditions existing at the valuation date or from what a typical market participant would assume in a transaction at that time.
Definition : A specific buyer who attributes special value to an asset due to unique advantages derived from its ownership, which may not be available to other buyers in the market.
Definition : A value assigned to an asset based on specific attributes that are valuable only to a particular purchaser or user.
Definition : Specific risk, also known as firm-specific risk, refers to the risk associated with a particular company or investment and is not related to broader market movements. It encompasses risks unique to that company, such as management issues, operational challenges, or industry-specific factors.
Definition : Standard deviation is a statistical measure that quantifies the amount of variation or dispersion in a set of values. It measures how much each value in the dataset differs from the mean (average) value of the dataset. A higher standard deviation indicates greater variability within the dataset, while a lower standard deviation indicates less variability.
Definition : Subjective value refers to the worth or importance an individual assigns to something based on personal beliefs, preferences, or opinions rather than on objective criteria. It is often influenced by factors such as individual perceptions, emotions, and experiences. This value can vary significantly from person to person and may not be easily quantifiable or measurable.
Definition : Systematic risk, also known as market risk, refers to the inherent risk associated with the overall market or economy. This type of risk cannot be diversified away and affects all investments to some degree. It includes factors such as interest rate fluctuations, economic cycles, inflation, and geopolitical events that impact the broader market.
Definition : An amortisation benefit refers to the tax advantage gained from the deduction of amortisation expenses on a capital asset. This benefit allows for a reduction in taxable income, resulting in lower tax liabilities for the entity.
Definition : An amortisation benefit refers to the tax advantage gained from the deduction of amortisation expenses on a capital asset. This benefit allows for a reduction in taxable income, resulting in lower tax liabilities for the entity.
Definition : Terminal value represents the value of all projected cash flows beyond a specified forecast period. It captures the worth of an investment or asset at the conclusion of an explicit forecast period.
Definition : The terminal year refers to the final year in a specified forecast period. It marks the conclusion of the projected timeframe for financial analysis or valuation.
Definition : Trading multiples, also referred to as comparable multiples or market multiples, are ratios used in financial analysis to compare the valuation of a company's stock to that of its peers in the same industry. These multiples are calculated based on various financial metrics such as earnings, revenue, or book value, and provide insight into how the market values similar companies.
Definition : Transaction multiples, also known as deal multiples, are ratios used in financial analysis to assess the value of a company based on the price paid in comparable transactions. These multiples are calculated by dividing the transaction value (such as purchase price or enterprise value) by a relevant financial metric (such as earnings, revenue, or EBITDA) to gauge the valuation of similar deals in the market.
Definition : Unsystematic risk, also known as firm-specific risk, refers to the risk that is inherent to a specific company or industry and is not related to broader market movements. Factors contributing to unsystematic risk include company management, competitive position, regulatory environment, and other industry-specific variables. This type of risk can be reduced through diversification across different companies or sectors.
Definition : A valuation approach is one of the primary methods used to estimate the value of an asset. Each approach encompasses various methods tailored to specific asset types or situations.
Definition : The valuation date is the specific date on which the assessed value is determined. It also encompasses the time at which this value is applicable, especially if the asset's value can significantly fluctuate within a single day.
Definition : Valuation inputs refer to the data and information utilized within a valuation methodology. These inputs can encompass both actual data as well as estimated values.
Definition : A valuation method refers to a particular technique or model employed to determine the value of an asset or entity. These methods are categorized within broader valuation approaches.
Definition : A valuation report is a document that presents a valuation opinion along with pertinent details to the designated recipient.
Definition : The process of examining and providing feedback on a valuation conducted by another entity, which may or may not involve offering an independent valuation judgment.
Definition : The highest potential loss that could be anticipated over a designated time frame due to changes in identified risk factors, with a certain level of probability, derived from statistical analysis of past price movements and volatilities.
Definition : The current worth of the future cash flows anticipated to be obtained from an asset or cash-generating unit.
Definition : Variance quantifies the spread of data points around their average value. It is the expected value of the squared differences from the mean.
Definition : The WACC (Weighted Average Cost of Capital) approach involves calculating the average rate of return required by all of a company's investors, weighted by the proportion of each source of capital (debt and equity) in the company's capital structure. This method is used to assess the cost of financing a company's operations and investments.
Definition : Assets that typically decrease in value over time in real terms.
Definition : The Weighted Average Cost of Capital (WACC) combines the costs of capital from each financing source (such as debt and equity), weighted by their respective proportions in the total financing pool.
Definition : The income generated from an investment, typically expressed annually as a percentage of the investment's cost, current market value, or face (par) value, often accompanied by a qualifying term or phrase.
Definition : The annual return expected on a bond if held until it matures, considering its current market price, par value, coupon interest rate, and the time remaining until maturity.
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