Why is Valuation Analysis Important ?

Valuation analysis estimates a company's market value by applying various valuation approaches. Let's find some analysis techniques here.

1) Income Approach (Discounted Cash Flow)

Discounted Cash Flow calculates a company's value based on the present value of its projected future cash flows.

2) Asset Approach

The Asset Approach values a company based on the net value of its assets minus liabilities.

3) Market Approach

It values a company by comparing its financial metrics to those of similar companies based on metrics like P/E ratio, PBV ratio, P/B ratio, ROE

4) Market Capitalization

Market cap is a company's value calculated by multiplying its share price by the total number of outstanding shares.

5) Determine Book Value

Book value is the net worth of a company, calculated as total assets minus total liabilities.

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