The Valuation Process Definitions of value Several value definitions serve as the foundation for the variety of valuation models available to the comparison of equity valuation methods, such as intrinsic value, going-concern value, liquidation value, and fair value. Intrinsic Value The intrinsic value of any asset is the value of the asset given a hypothetically complete understanding of the asset’s investment characteristics. The intrinsic value suggests that an asset’s market price is the best available estimate of its intrinsic value. Going-Concern Value and Liquidation Value In estimating value, a going- concern assumption is the assumption that the company will continue...
Financial accounting statements are prepared for the benefit of those outside the company.
Are you profitable?
Do you collect your “net profit”?
What are you worth?
Do you collect your “net worth”?
Cost-Volume-Profit (CVP) Analysis
Managers must make decisions about sales volume, pricing and costs and are concerned about the impact of their decisions on profit. Therefore, they need to understand the relations among revenues, costs, volume and profit. Cost-volume-profit, or CVP, analysis provides managers with information for decision making.
What is CVP?
CVP analysis explores the relationship between sales revenue, cost and their effect on profits. Also known as Break-even analysis