--%>
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 : Why classical option pricing required

    Why classical option pricing with constant volatility required?

    		•
  • Q : What is the current example of a value

    What is the current example of a value company and would you buy it as an investment. Why or why not?

    		•
  • Q : Explain value of shares is Is this

    Is this correct that the value of the shares is, the “value of the results’ capitalization” that, as per to the Institute of Accounting and Auditing (ICAC) shows “the sum of the expected future results of the company throughout a certain period

    		•
  • Q : How can optimal capital structure be

    How can optimal capital structure be calculated?

    		•
  • Q : Llustrate illiquidity risk and small

    My investment bank told me that beta given by Bloomberg incorporates the illiquidity risk and small cap premium since Bloomberg does well-known Bloomberg adjustment formula. Is it true?

    		•
  • Q : Does value of the company increase when

    According to the valuation method depends on tax shields, the value of the company (Vl) is the value of the unleveraged company (Vu) in addition with the value of tax shields (VTS), thus, the higher the interest and the higher the VTS. Therefore, does

    		•
  • Q : Define Credit and Collections Credit &

    Credit & Collections: Usually, credit is stated as the procedure of providing a loan, in which one party transfers wealth to the other with the expectation that it will be re-paid in full plus interest. The definition of collections is connected t

    		•
  • Q : Problem on optimal capital structure

    XYZ Company has debt/assets ratio 50%, that is too high and it must be at 45% to be optimal. This debt reduction must also reduce the bankruptcy costs by $30 million. At present, XYZ has 5 million shares of common stock selling at $50 each. The tax rate of XYZ is 30%.

    		•
  • Q : Public Finance which type of tax,

    which type of tax, direct or indirect is applicable in underdeveloped countries? Why? Show your critical areas and weaknesses.

    		•
  • Q : Why required return cannot computed by

    Why can we not compute the required return (Ke) by the Gordon-Shapiro model [P0 = Div0 (1+g) / (Ke – g)] in place of using the CAPM? As we identify the current dividend (Div0) and the current share price (P0), we can acquire the growth rate of the dividend by th

    		•