Over the last three years for a Retail Wholesale Australian Share Fund licensed under ASIC we have selected the shares to invest in. This selection is based on our valuation and analysis of the Top 200 S&P ASX listed companies. Since inception the Fund is a top performer in the Australian market with returns in the high 20ís.
A key valuation technique which we also incorporate in the selection criteria for the Australian Share Fund mentioned above is that the value of any business is its Future Free Cash Flows discounted back to Present Value at a risk adjusted rate.
We hold strongly to this view and believe that it is invalid not to address the future period projections. Unfortunately we have seen a number of business valuations by other valuers that only look at past and current earnings (and some that only use averages) and ignore any future projections.
Certainly past and future earnings can give confidence to the future projected earnings. However it is important to also take into account future projected cash flows so long as they are realistic and can be supported. Obviously it is up to the vendor to substantiate future projections and naturally for the purchaser to evaluate these projections. For them to be ignored in any valuation report is remiss.
All business valuations are an opinion and based on a number of assumptions. We refer to our business valuation reports as intrinsic valuations as they are based on various listed assumptions. In our reports we also give a range of values based on different sets of key assumptions. The reason for this is to give as much and as clear an opinion on the underlying value of the business as possible. We believe that this then gives any reader of the report a clearer picture of the underlying value and also narrows any discussion to specific areas.
Business and Company Valuations vary in time to complete and complexity and thus cost. Factors such as size and structure of business, industry, available past, current and future financial information including state of such information, and whether the valuation is for a parcel of shares or for total business. A basic range of prices is $5,000 to $7,000 with the price being set prior to any commencement.
For information that we need before we can undertake your business valuation click on the following link to download the PDF File: Valuation Business InitialMeetingQuestionnaire
To determine an approximate cost for your business valuation click on the following link to download the PDF File:
Dollar ($) Intrinsic Business Valuation Your Agreement & Costing
An important principle in our Valuation Methodology is to determine the sustainable cash flows into the future. For Public Company valuations we do not have access to precise forecasts (usually reside in CFO'S office only). We trend past results into the future. An important element is to ensure that the capital base is a true economic base and that the NOPAT's are cash based and sustainable cash flows. A number of reversals of accounting entries are required to achieve this. For more information on this matter and two examples that show how important this reversal process is click on the following link: Value Based Data
We have written two e-Books that will definitely help investors understand critical matters in regards to share valuations. Avoid over valued shares such as Enron which the market over valued by 90%. Click on the following link for details on The Facts that You should know about the Enron collapse
Be careful about investing in or holding shares that have large premiums built into their share price and there are still plenty of these shares trading on the share market today even though the market prices have declined sharply in recent months. Click on the following link for details on Investors need to Know
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In regards to our Cash Volume Calculator many business owners, businesses and even consultants do not know what cash gain or loss will be derived from a Change in Volume.
For many businesses increased sales mean a decrease in cash flow for the first year due to the need to finance additional working capital (debtors & inventory less trade creditors). The second year cash flow from the increased sales is usually positive (a gain),
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