Discuss the different measures of value for company valuation? Explain

Question

Discuss the different measures of value for company valuation? Explain the various methods used to assess and measure future value of equity shares which are based on quantitative factors with suitable examples.

31 Mar 2022

Answer :

Word Count : 663

Security analysis and portfolio management involve assessing the value of companies and their equity shares to make informed investment decisions. Various measures and methods are employed to evaluate the value of a company, especially its equity shares. These measures can be broadly categorized into quantitative and qualitative factors, but here we will focus on the quantitative aspects.

### Measures of Value for Company Valuation:

#### 1. Earnings Per Share (EPS):
- EPS is a fundamental measure that represents the portion of a company's profit allocated to each outstanding share of common stock.
- It is calculated as (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares.
- Example: If a company has a net income of $1 million and 500,000 outstanding shares, the EPS ______ ______ _____ ____ _________ ____ ________ ________.
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