ACCT2362 Forensic Accounting
Company Valuation
Task 1: Try, In Words, To Explain What I Have Done In The Three Screencast Videos.
With the need to make sales of one company, an investor needs to understand or even know n what other investor have done, the price they have sold their own companies, the return from the sale and other information which may be effective is the sales (Schueler, 2021). The sales of the company need to be considerate of the sales that the company makes and the value of the company in the market. What the professor has done was research on the other company information. Other company which he presume that they might be similar to his company (Metrick, 2021). Example the company he is researching on is the nail salon whose market worth is below $1000000 this is the reason why the input variable were distinctively in the SIC industrial code for beauty salon 7231 to which the company he is valuing belongs. This way he gets the information on sale of companies in the same industry, the same or likely same market value. Through the comparison data that they get they can make sale decision on price and return to be gained.
Task 2: What DEALSTATS Valuation Metrics Will You Use To Value The Nail, Salon.
When evaluating the sale of other company with aim of making decision of sale of my company the market value of the invested capital compared to sales, EDITDA and discretionary earning of the investor will become a concern to me (Metrick, 2021). However in this analysis is will utilize the sale because I believe that the sales of the company should be influenced by the value of the company in the market. Because the value of the capital invested in a company show the value of the company and thus the sales value of the company. Additionally i will utilize the income of the company shown by the EDITDA. The company price should be influenced by the profit it creates to the investor and thus the ration between the MVIC/EBITDA and MVIC/SALES will be used in this analysis
Task 3: Using What You Proffered In TASK 2, Actually State The Value This Nail Salon. Explain Your Results.
|
|
Sales |
Officer Compensation |
Salaries/Wages |
Net Income |
|
2015 |
$263,845 |
$95, 615 |
$0 |
$7,218 |
|
2016 |
$338,326 |
0 |
$108,280 |
$1,725 |
|
2017 |
$316,300 |
|
|
($32,938) |
|
2018 |
$355,180 |
$31,200 |
$74,660 |
$31,200 |
|
2019 |
$375,680 |
$31,335 |
$83,756 |
$31,335 |
With the sale of the organization being as stated in 2019 and 2018 the company seeks to be having stability in the sales (Abraham, 2021). The net income has been stable for the year 2019 and 2018 at positive frontier which means the company can be termed as profitable.
Due to the sales made by the nail salon and the correspondent net income the company can be grouped to belong to a group of company which have been sold as presented in the excel document (Schueler, 2021). There are 104 comparison companies with which the company will be compared.
|
|
MVIC/Sales |
MVIC/EBITDA |
|
mean |
36.86% |
638.313% |
|
median |
27.70% |
928.160% |
|
standard dev |
54.75% |
433.377% |
From the table above the company belong to the above ration according to the compared companies. The mean value shows the mean value of the compared 104 companies for both the market value of the invested capital/ sales and market value of the invested capital/ sales (Schueler, 2021). According to the data ABOVE the seller or the investor should seek a sale with ration of 36.86 or there about and the ration of EBITDA percentage of 638.313% or there about.
