--%>
Assignment Help - homework help

Problem about commercial and fiscal informative statements

A court assigned to me (as an auditor and economist) a valuation of a market butcher’s. The butcher’s did not give any simple income statements or any valuable information that I could use in my valuation. This is a small business with just two workers, the owner and an apprentice. This kind of tax system exempts them of specific commercial and fiscal informative statements.

I think this is very significant to underline that the object of the valuation is not a company, but quite a business, a work position. Although this has recurrent customers the value of its tangible assets is only the value of its tools, like the premises are rented (I think this is impossible to value the intangible asset which is the work). Here discounting cash flows in not a suitable method in this case. In fact, I do not know that profession fits better the job which the court assigned to me.

E

Expert

Verified

In order to value the butcher’s like a business you must also forecast the flows this will give. As the butcher’s does not consider being a business with a high rate of growth, you can see how much the owner earned for all the ideas, during the past years (the raises in the cash holdings, when any).

From such quantity you must subtract a reasonable wage and the difference you acquire is the flow for the shareholder. Though, this is just for the case where such type of valuation results superior to the liquidation value (when the local or the leasehold assignment was very valuable).

   Related Questions in Corporate Finance

  • Q : What is Regular meeting of day-to-day

    Regular meeting of day-to-day commitments: The estimation of WCR also helps to ensure that there is positive WC existence. This proves helpful in meeting requirements which are regular in nature such as payments of salaries, wages, rental charges etc.

    		•
  • Q : Standard deviation of portfolios returns

    Assume that you have $50,000 which you want to invest in two companies, XYZ Books and ABC Audio. XYZ has a return of 10% and standard deviation 15%, while ABC has return of 15% with a standard deviation of 20%. The correlation coefficient between them is .5. Your port

    		•
  • Q : Why do a Split Why do a Split?

    Why do a Split?

    		•
  • Q : Explain the way of estimating an average

    Explain the way of estimating an average.

    		•
  • Q : Problem on Stock per share value ABC

    ABC Company plans to buy back 1 million shares of its own stock from its cash reserves at $50 a share. This will raise the bankruptcy costs by $10 million, and the debt/assets ratio from 35% to 40%. The income tax rate of the company is 30%. Determine the value of the

    		•
  • Q : Explain Indenture Explain the term

    Explain the term Indenture and also describe their provisions?

    		•
  • Q : Case Study 2 You have joined Zurich

    You have joined Zurich Pvt. Ltd as a Finance manager. You are given the following information: Zurich Pvt Ltd. is a diversified manufacturing firm dealing with electrical appliances. In 2012, the firm reported an operating income of Rs. 857.60 million and faced a tax rate of 35% on income. The firm

    		•
  • Q : Define stock variable Stock variable :

    Stock variable: It is a variable whose value is measured or evaluated at a point of time.

    		•
  • Q : PV of Dividends PV of dividends:

    PV of dividends: Cortez, Inc., is expecting to pay out a dividend of $2.50 next year. After that it expects its dividend to grow at 7 percent for the next four years. What is the present value of dividends over the next five-year period if the required rate of return is 10 percent?

    		•
  • Q : Problem on financial manager

    Assume that you are a financial manager of Yuen Cheong Manufacturng Company. Due to the rising demand of product X, Yuen Cheong Manufacturng Company decides to open a new production plant in China, so it needs to take a loan of US$1 million. Bank A offers Yuen Cheong

    		•