Company’s Valuation

Overview

This assignment will help you explore economic indicators, discounts used in the valuation process, and valuation methods.

The first part of this assignment focuses on economic indicators. Economic indicators are factors that can significantly impact the financial health of a company. Examples of economic indicators include trade policy, monetary policy, interest rate changes, gross domestic product (GDP), etc. Often, economic indicators will affect how consumers spend their money and how companies run their operations. This assignment will allow you to identify key economic indicators, describe any significant changes, and explain the impact of these changes.

The first part of this assignment will help you complete Milestone Three.

The second part of this assignment focuses on discounts used in the valuation process. These discounts include the discount for lack of control (DLOC) and discount for lack of marketability (DLOM). This also includes the discount that is used in the discounted cash flow (DCF) valuation method, which is one of the income-based approaches. The second part of this assignment will help you complete your project later in this course.

The third part of this assignment focuses on valuation methods. There are multiple methods that can be used when preparing a valuation for a company. Many analysts use their own techniques that include a combination of these primary methods, and they will all incorporate an earnings-based valuation method as part of their process. It is important to understand the three main valuation methods and how they are used.

The third part of this assignment will help you better understand each valuation approach

Directions

For this assignment, you will be taking a close look at the key economic indicators that a company should be aware of when making business decisions. You will also describe significant changes to the economic indicators and the impact these changes have had on the domestic and global economies. You will also explore the discounts used in the valuation process and the types of valuation methods that are used.

Specifically, you must address the following rubric criteria:

Economic Indicators

1. Explain what economic indicators are and why they are important to a company.
2. Identify three types of economic indicators that a company might use to inform its business decisions.
3. Explain how a company might make business decisions based on its knowledge of economic indicators.
4. Explain any significant changes that have affected economic indicators over the past three to five years. Include the following detail in your response: Explain what you think caused the changes to occur.
5. Explain the impact the changes to the economic indicators have had on both domestic and global economies.
6. Explain how a company should respond to changes related to domestic and global economies to remain in business and competitive.

Valuation Discounts

Explain the discount for lack of control (DLOC) and when it is used in the valuation process
1. Explain the discount for lack of marketability (DLOM) and when it is used in the valuation process.
2. Explain the discount rate that is used in the discounted cash flow (DCF) valuation method. Include the following detail in your response:Describe how the discount rate is derived in this DCF method.

Valuation Methods

Explain the market-based approach valuation method. Include the following detail in your response:When might the market-based approach valuation method be used?
1. Explain the asset-based approach valuation method. Include the following detail in your response:When might the asset-based approach valuation method be used?
2. Explain the earnings-based approach valuation method (discounted cash flow valuation method). Include the following detail in your response:When might the earnings-based approach valuation method be used?

What to Submit

Submit your assignment as a 3- to 4-page Microsoft Word document with double spacing, 12-point Times New Roman font, and one-inch margins. Sources should be cited according to APA style.

Note: You do not need to submit a cover page with this assignment.