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Business valuation
Introduction to business valuation
1.1 Factors affecting the value of a business
Business valuation is not a precise, scientific process. The value of
a business is affected by:
reported sales, profits and asset values
forecast sales, profits and asset values
type of industry
level of competition
range of products sold
breadth of customer base
perspective – the buyer and the seller will often have different
expectations and hence may value the business differently.
The valuation methods covered below give suggested values of a business. The final
value is then agreed between buyer and seller after a process of negotiation.
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