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2015
BUSI 690
Liberty University
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Business Valuation is important to investors. There are several ways to value a
business but ultimately it’s the investor’s thoughts about what the business means to him.
One can tell a lot about a business by looking at its assets and inventory. Reviewing a
company’s balance sheets and estimating value for the approximate worth can help an
investor decide if this is the right company for him to become a shareholder.
A firm’s financial team is responsible for maintaining positive cash flow and
while guiding the company into making good investment decisions. A business model is
how a firm develops and presents itself to the industry and their consumers. A good
business model plan can obtain healthy profits to sustain a corporation. Ethical leadership
and corporate responsibility encompass every business industry some more than others
such as environmental firms or chemical plants, etc. It is up to the leadership to give
feedback to the local community and provide education.
Finding valuation of a business is a technique of calculating value of companies
and their stock. By dividing the current yearly earning by the long-term Treasury bill rate
one can quickly evaluate a company’s cash flow, (Robbins, 2004). By looking at similar
businesses in the industry one can make a clear determination about value. This will give
a potential investor a theory in regards to a company’s net present value.
There are several methods to determine a company’s worth: Public stock ratios,
Book value, comparing similar items with other companies and cash flow. Analysts
compare the Price Earnings ratio (P/E) to estimate the value of a company and compare it
to other companies for similarities in earned income ratio and assets. Future stock value
is predicted using the dividend discount model. If dividends increase so may the value of
the stock. Economic value generates a way for a business to be compared in the industry.
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Values are important to everyone. The value of a company is defined by the
customer or investors. Communication and a good working customer relationship is the
framework of every organization. Company core values such as integrity, ethics, worth
and compassion defines who we are as a person and how a company will react in a
certain industry. Return customers can be considered purchasing power and by having
an excellent relationship with customers and industry competitors and organization will
thrive in the market place. Core values support a vision and uphold a culture or reflect a
positive movement for a social cause. Governments play a significant part in shaping a
culture and its people due to the fact they maintain policies and enforce regulations. It is
essential for a corporation to follow laws and regulations to avoid fines and decreased
value.
Value may be determined by your competitors. According to Rothaermel, “action
by a key competitor may impact the organization’s strategy just as its business strategy
may force a reaction by a key competitor” (Rothaermel, 2013, p. 30). Consumers
represent market value. The value of a company is what an investor is willing to pay for
shares based on factors related to that company. We as Christians value integrity, our faith
and the fact we serve God over money. Matthew 6:24 says, “No one can serve two
masters, for either he will hate the one and love the other, or he will be devoted to the one
and despise the other. You cannot serve God and money.
Value is knowledge and strength in our faith. The more we grow in our faith, the
more others invest in you spiritually.
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References
Bansal, P., & DesJardine, M. R. (2014). Business sustainability: It is about time.
Strategic Organization, 12(1), 70-78.
Dividend Discount Model: The Essential Guide. (n.d.). Retrieved from
http://dividendmonk.com/dividend-discount-model/
Kaufman, K. (n.d.). 4 Methods To Determine Your Company's Worth | OPEN Forum.
Retrieved from https://www.americanexpress.com/us/small-
business/openforum/articles/4-methods-to-determine-your-companys-
worth/
Kazlauskienė, V., & Christauskas, Č. (2015). Business valuation model based on the
analysis of business value drivers. Engineering Economics, 57(2).
Osterwalder, A. & Pigneur, Y. (2010). Business model generation. Hoboken, NJ: John
Wiley & Sons.
Robbins, S. (2004). How to Value a Business?. Retrieved from
http://www.entrepreneur.com/article/66442
Rothaemel, F. (2013). Strategic management: Concepts & cases. New York: McGraw-
Hill Irwin.
Bible, Holly. “King James version online”. (2014).
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