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Corporate Valuation

CORPORATE VALUATION: DETERMINANTS OF CORPORATE VALUE

The value of public companies is determined by the stock market. The value of companies not publicly quoted will be greatly influenced by the same market.

Therefore, we will focus on the main stock-market-related ratios.

They are:

· Market Capitalization
· Share values, nominal, book, market
· Earnings Per Share (EPS)
· Dividends Per Share (DPS)
· Dividend Cover and Pay-Out Ratio
· Earnings Yield
· Dividend Yield
· Price To Earnings Ratio (PE)
· Market To Book Ratio

Below is the balance sheet for Dandy Fashion Berhad:

Dandy Fashion Berhad

BALANCE SHEET AS AT 31 DECEMBER 2006

($000,000s)
Assets Liabilities & Shareholder's Equity
Long Investment $ $ Owners Funds $ $
Net Fixed Assets 440 Issued Capital 80
Investment 40 Capital Reserves 60
Revenue Reserves 220
360
480 Long-Term Loans 200

Current Assets Current Liabilities
Inventory 128 Short-Term Loans 60
Accounts Receivables 160 Accounts Payable 140
Cash 20 Miscellaneous 40
Miscellaneous 12
320 240
TOTAL ASSETS 800 TOTAL LIABILITIES & SHAREHOLDER'S EQUITY 800

Assumptions:

Issued Capital: 32,000,000
Nominal (par) value of $2.50
Book (asset) value of $11.25
Market value of $22.50

Profit and Loss Account For Year Ended 31 December 2006...