Using Various Protocols That Accurately Reflect The Value...

Using various protocols that accurately reflect the value of a firm by properly determining both the current financial position as well as correctly estimating the future value of current operations and or the benefits and risks of possible business opportunities is much akin to a new scout learning how to whittle. The scout recognizes that there are multiple blades on the knife, yet doesn’t quite know how they are supposed to be used. There are a plethora of approaches to use in financial valuations, and much like the scout, I value the main tools too much and the specialized tools are somewhat confusing to me. Just as the scout knows that wondrous things are possible and is thoroughly convinced that he is capable to do them. The†¦show more content†¦Valuing organizations starts with the financial statements and moves through the current position of the firm into the future forecast of the firm’s position. The financial statements paint a picture of not only how the company is, but how they have performed over the last x-number of years. Factors to look at would be net income, cash and A/R, debt and A/P, current and past sales. These factors start by painting the picture of what has happened up to now within the organization and what they have on hand for future operations. Is net income (profitability) high or low? Is the firm laden with debt of a high accounts payable? Is the firm growing, retrenching, or remaining stable based on sales data. These are the first places that you as a valuator must look. Secondly, you must evaluate the future objectives of the firm. This will also be sourced from within the financial statements, more directly the Performa’s produced by the organization to detail projected revenues over the next number of x- periods. These Performa’s are going to be the crux of this valuation how to assessment. Free cash (Athanassakos, 2009, p. 1) is the economic evaluation of a firm’s ability to maintain after tax flows of cash over time and regardless of product or service. The calculation: starts with EBIT, subtracts out the