Respond to classmates Human Resource and Accounting

FIN response m4

john

When it comes to value of stocks or bonds for a company I would assign it with what the stock or bond costs when it was purchased or what it is worth when it is ready to be closed or sold.

When it comes to valuation, it would need to be processed for what it is worth if it is sold to someone else. The other one is what it is worth when it is closed to be paid out to the company. A company can do either but they will most likely go with the one that is more profitable for the company. An example is if they own a stock that has been doing down in value, they might close it out so that they don’t lose more money on it or the other way around if it gets a large jump in the stocks and it is worth millions to cash out before it does plum it downward.

Lacy

There are a number of reasons why a firm should have an up-to-date valuation. Whether you are selling the business, adding shareholders or needing debt or equity financing for expansion or due to cash flow problems, you will need to seek a valuation (Ward, 2018). You should always outsource a valuation. By valuing your own company, you may miss vital factors which will taint the end results.

There are three different business valuations: Asset based approaches, earning value approaches and market value approaches. Asset based approaches total all the investments in a firm. They can be done on a going concern or on liquidation basis. A valuator uses the earning value approach to determine an expected level of cash flow based on past earnings and then multiplies it by a capitalization factor (Ward, 2018). The market value approach is when a valuator values your business based on the recent sale of a similar business in the same area as your firm. This can be difficult, though, because an accurate valuation would require a firm to be the same size and quality as yours.