What do you mean by valuation of shares? Explain the net assets method for valuation of shares.
Answer (1)
13th Dec, 2020
Hello, valuation of shares is a method to determine the value of company's shares. It is a dynamic value meaning the value of the shares will differ often due to fluctuation in market demand and supply. There are five methods to determine the value
- Asset Method
- Yield-Basis Method
- Fair Value Method
- Return on Capital Employed Method
- Price-Earnings Ratio Method
Net assets is the difference between total asset value of a company minus the liabilities value. Liabilities are the money that the company need to pay whereas assets are the money the company will be paid to. By dividing the Net assets by the shares one can arrive the value of each shares.
Hope this helps.
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