ASSIGNMENT | Discussion board forum

Several factors, both internal and external, impact a company’s stock price and the subsequent perceived valuation of a company. Sometimes that perceived value matches that of the financial statements, and other times it is vastly different. Therefore, discuss the factors that lead to a valuation of a company’s worth compared to that of the financial statements and how company executives create the most value for all stakeholders.

SAMPLE SOLUTION

Business valuation has a great role in estimating the economic value of the interest of a business owner has. Such valuation can be important in determining the prices to be set by business operators within the financial market. There exists both internal and external factors that affect the stock price of a company which in turn has an impact on the perceived valuation of a company. We have times whereby the perceived firm’s value is in line with the financial statements whereas it is totally different at other times. (Brealey, Meyers & Marcus 2012). Some of the factors that can determine the worthiness of a firm include its earnings, business prospects and industry growth.
Financial analysts often identify a group of several identical firms when needed to value the business in question. They afterwards try to determine the figure that investors in the company should pay towards every value of assets. This is the method used most by various firms…