The valuation of shares determines the current worth of a company’s stock based on its financial health, assets, liabilities & market performance for informed decisions.
The common methods are Asset-Based Valuation, Earnings-Based Valuation, Dividend Discount Model (DDM), Price-to-Earnings Ratio & Discounted Cash Flow (DCF) Analysis.
Valuation of shares is needed for raising capital, ensuring fair pricing in mergers & acquisitions, tax compliance & resolving disputes through accurate share valuations.
Factors affecting share valuation include earnings performance, market sentiment, industry growth, interest rates, dividend policies, and economic conditions.
Types of valuation of shares are absolute methods, focusing on intrinsic value through fundamentals & relative methods, comparing a company's stock to its industry peers.
Shares need valuation to establish a fair market price for transactions, ensuring informed decisions and reducing the risks of overvaluation or undervaluation.
Valuation of shares helps investors make informed decisions, facilitates mergers, supports capital raising, ensures accurate taxation & aids legal disputes.
Share valuation is subjective, can yield inconsistent results, time-consuming, sensitive to market fluctuations & relies on assumptions that may mislead decisions.