Principles of finance, unit 1 challenge 1 (goals and organizations of financial. In finance, valuation is the process of estimating what something is worth. Valuation often relies on fundamental analysis of the financial statements of the project, business, or firm, and using tools such as discounted cash flow or net present value. As such, an accurate valuation, especially of privately owned companies, largely depends on the reliability of the firm"s historic financial information. Items that are usually valued are a financial asset or liability. Valuations can be done on: assets: investments in marketable securities (stocks, options, business enterprises) or intangible assets (patents and trademarks, liabilities: bonds issued by a company. Valuation is used to determine the price financial market participants are willing to pay or receive to buy or sell a business. Valuation: the process of estimating the market value of a financial asset or liability.