The Art Of Property Valuer Perth

I’d like to walkabout a different way of approaching valuation when you try to value and acid based not on its fundamentals but based on what other people are paying for assets just like it it’s called pricing or relative valuation and it turns outta be the way that ninety percent of what passes for evaluation out there is really it’s done so these last few sessions we’ve laid out and looked at the details of entrance evaluation or in particular we use this kind of casual evaluation to value the company but in this session I want to turn to a different way of thinking about valuation I’m going to call it relative valuation.

But i think abetter term for it is pricing so let me back up and talk a little bit about where I’m going with this concept in relative Property Valuers Perth rather than value company based on its fundamentals its cash flows growth and risk you value company by looking at how the market is pricing other companies just like so if you break down relative valuation it has three parts to it the first part is to find out the companies that you claim are just like your company tough too tough to do but that’s the first step the second is you got to standardize.

prices what i mean by that is you cannot compare the price per share across companies because in a sense it’s an arbitrary number arbitrary why is valid a stock split my price per share would have so you can’t look at the price per share you have to divide it by some number and that’s what you do when you use multiple to divide price by earnings a price-to-book you have a standardized price to find out the companies like yours you standardize surprise and then if you’re careful you probably will notice that your company’s still different from those other companies in terms of growth and risk in cash flows you have to control for those differences so find compartmentalized.

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