- What are some of the major challenges of valuing a business? For example, how would one accurately be able to project earning potential?
- Support your response with at least 2 academic sources outside the required materials for the course.
- Read your classmatesâ€™ messages and post at least one reply
- reply 1:
The business evaluation process combines two important elements, namely science and art, and it is considered one of the hard work in general, and it is also considered a necessary process.
Business valuation requires thorough and detailed analyzes, very accurate assumptions, the use of professional judgment and the application of finance theory.
There are challenges that may face business evaluation professionals, including:
Identify and track the necessary documents
Distribution of taxes and financial statements
Find data on the company’s industry on the basis of which the relevant entity can be measured
Preparing comprehensive reportsFor most professionals, the most difficult challenge is to compile a robust and fundamentally sound report.
Also, determining the actual value may be very difficult, especially for large businesses that have high competitionCareful analysis and arriving at accurate assumptions are merely forecasts to highlight the potential of business profits.
This process is complex because business valuation is a subjective process.
One has only to assume that all the information found is correct.