Session 14: Equity Analysis and Valuation
Reading 60: Equity Valuation: Concepts and Basic Tools
LOS j: Explain asset-based valuation models and demonstrate the use of asset-based models to calculate equity value.
Gwangwa Gold, a South African gold producer, has as its primary asset a mine which is shown on the balance sheet with a value of R100 million. An analyst estimates the market value of this mine to be 90% of book value. The company’s balance sheet shows other assets of R20 million and liabilities of R40 million, and the analyst feels that the book value of these items reflects their market values. Using the asset-based valuation approach, what should the analyst estimate the value of the company to be?
Market value of assets = 0.9(R100 million) + R20 million = R110 million
Market value of liabilities = R40 million
Estimated net value of company = R110 million ? R40 million = R70 million.
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发表于 2011-3-30 12:05
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