Introduction
Valuation of a diversified company is a process undertaken to assess the value of the enterprise. This can involve different estimates for potential losses and profits, asset values, planning of future projects, and monitoring of the company’s development process. A diversified company can be valued in several steps.
Steps of Company Valuation
Step 1: Company Examination
The first phase is the examination of the company. This process involves reviewing and assessing all aspects of the business, such as financial structure, potential risks, staying in the market, and achieving goals. Based on the analysis, decisions or plans for the company’s future development must be made (Noy et al., 2019).
Step 2: Assessment of Company Value
The second phase is the assessment of the company’s value. At this stage, detailed calculations are performed to determine the business’s active and passive value. This allows a person to estimate the value of the company’s assets and determine the potential return for investors.
Step 3: Strength Matrix
The third step is using an attractive business strength matrix (9-cell). It is used to assess the composition of a diversified company. The matrix analyses essential indicators to determine the attractiveness of each project. This includes such indicators as risk, profitability, asset value, and others.
Advantages
The use of an attractive business strength matrix offers several advantages. First, it enables investors to better understand the risks they face when investing in a diversified company. Second, it provides a better understanding of the potential return on investment that diversification projects can offer (Noy et al., 2019). Third, the attractive business strength matrix provides information on profitability and risks that may arise when investing in a diversified company.
Conclusion
All things considered, the valuation of a diversified company includes several stages, including the analysis of the company, assessment of the value of the business, and the use of a matrix (9-cell). Using this attractive business strength matrix provides several benefits, such as a better understanding of risks, access to information about returns and risks, and a better understanding of the potential return on investment. This allows diversified companies to obtain the best investment results and maximize their resources.
Reference
Noy, N., Gao, Y., Jain, A., Narayanan, A., Patterson, A., & Taylor, J. M. (2019). Industry-scale knowledge graphs: Lessons and challenges: Five diverse technology companies show how it’s done. ACM Queue, 17(2), 48–75. Web.