Page 188 - Corporate Finance PDF Final new link

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188 Corporate Finance BRILLIANT’S

11. Tax Incentives/Special privileges: A 11. Q>¡³g B§g|{Q>d/ñnoeb {à{dboOog… EH$ H§$nZr
company which enjoys special privileges, tax Omo {deof {à{dboOog VWm Q>¡³g B§g|{Q>ìg H$m AmZ§X boVr h¡
incentives, and government subsidies has an
advantage and therefore the value of shares is Cgo JdZ©‘|Q> gpãgS>rO H$m bm^ hmoVm h¡ VWm Bg{bE
high. eo¶g© H$m ‘yë¶ A{YH$ hmoVm h¡&
12. Market position: Market status of the 12. ‘mH}$Q> nmo[OeZ… H§$nZr H$s ~mOma pñW{V O¡go
company like market share and monopoly sta- ‘mH}$Q> eo¶a VWm ‘moZmonmobr ñQ>oQ>g eo¶g© Ho$ ‘yë¶ ‘|
tus adds bounce to the value of shares. CN>mb bmVm h¡&

13. Political conditions: The value of share 13. nmo{b{Q>H$b H§${S>e§g… EH$ H§$nZr Ho$ eo¶a H$m
of a company is not determined by the perfor- ‘yë¶ Ho$db H§$nZr Ho$ àXe©Z Ûmam {ZYm©[aV Zht hmoVm h¡,
mance of the company alone, the political sce-
nario of the country also affects the value of Xoe H$m amOZ¡{VH$ n[aÑí¶ ^r eo¶a Ho$ ‘yë¶ H$mo à^m{dV
share. H$aVm h¡&
14. Economic conditions: Economic condi- 14. BH$moZm°{‘H$ H§${S>e§g… BH$moZm°{‘H$ H§${S>e§g eo¶a
tions impact the share valuation. If the economic Ho$ ‘yë¶m§H$Z H$mo à^m{dV H$aVr h¢& ¶{X BH$moZm°{‘H$ H§${S>e§g
conditions are good, the value will be high. AÀN>r h¢ Vmo ‘yë¶ A{YH$ hmoJm&

Methods of Valuation ‘yë¶m§H$Z H$s {d{Y¶m§
The shares included in the list of stock ex- Omo eo¶g© ñQ>m°H$ E³gM|O H$s gyMr ‘| gpå‘{bV h¢
change are quoted in the newspapers and the ݶyOnong© ‘| H$moQ> {H$¶o OmVo h¢ {H$ÝVw eo¶g© {OÝh| H$moQ>
shares not quoted are valued and their value is Zht {H$¶m J¶m h¡ CZH$m ‘yë¶m§H$Z {H$¶m OmVm h¡ VWm
found out by various methods. {d{^ÝZ {d{Y¶m| Ûmam CZH$m ‘yë¶ kmV {H$¶m OmVm h¡&
There are two widely applied methods for eo¶g© Ho$ ‘yë¶m§H$Z Ho$ {bE ì¶mnH$ ê$n go à¶moJ H$s
the valuation of shares: OmZo dmbr Xmo {d{Y¶m§ h¢…
(a) The Assets Backing Method; and (a)AgoQ²>g ~¢qH$J {d{Y VWm
(b) The Yield Valuation Method. (b)¶rëS> d¡ë¶yEeZ {d{Y
A. Asset Backing Method A. AgoQ²>g ~¢qH$J {d{Y
This method is also known as Asset-valu- ¶h {d{Y AgoQ>-d¡ë¶yEeZ {d{Y ¶m B§qQ´>{gH$ d¡ë¶y
ation Method or Intrinsic Value Method. Un- {d{Y ^r H$hbmVr h¡& Bg {d{Y Ho$ A§VJ©V eo¶a H$s d¡ë¶y
der this method, the share's value is simply gm‘mݶV… ZoQ> AgoQ²>g ¶m B[³dQ>r H$mo eo¶g© H$s g§»¶m go
the total of net assets or equity, divided by the
number of shares: ^mJ {X¶m OmVm h¡…
Value of net assets
i.e. Value of one share =
Number of shares
* Value of Net Assets = Total of realisable assets - Total of external liabilities.
Note: In ascertaining the amount of net as- ZmoQ>… ZoQ> AgoQ²>g H$s ‘mÌm nVm bJmZo Ho$ {bE JwS>{db
sets, the value of goodwill (explained later) as well H$s d¡ë¶y (~mX ‘| g‘Pm¶m J¶m h¡) Ho$ gmW-gmW {H$gr
as the value of any contingent assets and liabili- H§$qQ>O|Q> AgoQ²>g VWm bm¶{~{bQ>rO H$s d¡ë¶y H$m ^r {dMma
ties should also be taken into consideration.
H$aZm Mm{hE&