Finance Paper

Topics: Discounted cash flow, Net present value, Generally Accepted Accounting Principles Pages: 4 (1453 words) Published: March 20, 2013
Valuation process is very crucial and central to many companies. It has been very important in the financial relm for along time. The valuation process is still been develop in the business world today. The estimation of the true value of a business firm challenged academicians as well as practitioners, company owners, managers and consulting firms in the past and it will most likely continue be a challenging issue in the future (Perek, 2012). This article is about nine Trukish companies, using the valuation process by comparing the Residual Income vs. Discounting Cash Flow Vauation Models. The importance of valuing is still growing in this countries because of its growing economy and attactive investments. There are two valuation model that is been look at in this article. They are the discounte cash flow and the residual income model. These approceaches holds different models which in return gives major diffences. Base on the article the discounted cash flow is to give intrincic value and the key theory is to find the present value of the future asset. The discounted cash flow valuation model is one of the main methods use in this article. It is use to discover the present value of an asset. It also requires the knowledge of the life of the asset, the expected cash flow and the discount rate as inputs. Relative valuation compares the price of an asset to the market value of similar assets. The contingent claim valution stand on pricing where by the asset is look at as an option pricing and uses option techinque pricing to find the value. These is found to be very useful for companies who having diffcult in there research and development area or cash flow. The Residual Income Valuation model has two components: the current book value of equity and the present value of upcoming residual income. Ohlson (1995) develops a residual income model where he provides a framework of how market value is related to three accounting data: earnings, book...
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