Class Notes (810,861)
Canada (494,337)
Accounting (31)
BAC 121 (30)

maximizing value

2 Pages
Unlock Document

Bishop's University
BAC 121
Serge Coulombe

f an important financial objective of a business is to maximise the value of the business, how can this be achieved? The answer lies in the different approaches to valuing a business. There are two broad approaches to valuing a business: (1) Break-up Basis: this method of valuing a business is only of interest when the business is threatened with liquidation, or when management are considering selling off individual assets to raise cash; (2) Market Value Basis: The market value of a business is the price at which buyers and sellers will trade shareholdings in a company. This method of valuation is most relevant to the financial objectives of a business. When shares are traded on a recognised stock market, such as the Stock Exchange, the market value of a business can be measured by the share price. When shares are held in a private company, and are not traded on any stock market, there is no easy way to measure value. It becomes a subjective judgement on behalf of both the buyer and seller about factors such as: • Future profits and cash flows that the buyer can expect t
More Less

Related notes for BAC 121

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.