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Trifonov, Nikolai Yu. "Income Valuation Approach: Recent Advances." Economic Strategies 144, no. 3 (June 25, 2021): 100–109. http://dx.doi.org/10.33917/es-3.177.2021.100-109.
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In modern unstable economic conditions, when valuating unique or capital-intensive objects, it is more often value in use (investment one or user one) is determined. In this case, the calculations are based on the income approach, linking the future incomes of the asset under valuation and the risks of not receiving them. The article describes the latest advances in calculating techniques previously unknown in world practice, covering the variability of the capitalization rate over time and refined formulas for the risk build-up method.
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Longhofer, Ronald S. "The Residual Income Method of Business Valuation." Business Valuation Review 24, no. 2 (June 2005): 65–70. http://dx.doi.org/10.5791/0882-2875-24.2.65.
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Russell, Mark. "The valuation of pharmaceutical intangibles." Journal of Intellectual Capital 17, no. 3 (July 11, 2016): 484–506. http://dx.doi.org/10.1108/jic-10-2015-0090.
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Purpose – The purpose of this paper is to value the patents of pharmaceutical companies using discounted cash flows, and compare the value-relevance of these assets against alternative intangible asset measures such as reported intangible assets and R & D capital. Design/methodology/approach – The study values pharmaceutical intangibles using three methods: an income method; the sum of unamortised R & D expenditures; the firm’s reported intangible assets. Value-relevance tests use ordinary least squares regression and Vuong and Clarke tests. Findings – First, the study finds that the discounted cash-flow valuation of pharmaceutical patents is value-relevant. Second, the value of pharmaceutical patents explains market value better than reported intangible assets but not R & D capital. However, the valuation of pharmaceutical patents is more consistent with the risks of R & D than the valuation of R & D capital which assumes recovery of R & D expenditure. Originality/value – This is the first known study that values patents using an income method and compares those valuations with reported intangible assets and R & D capital valuation models.
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Dyson, A. C. L., and C. J. Exley. "Pension Fund Asset Valuation and Investment." British Actuarial Journal 1, no. 3 (August 1, 1995): 471–557. http://dx.doi.org/10.1017/s1357321700001203.
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ABSTRACTThe theoretical basis for, and practical application of, the discounted income method for valuing UK pension fund assets is discussed, with particular reference to the widely adopted application to variable income (equity type) assets, as proposed by Day & McKelvey (1964), in the context of both the management and compliance objectives of pension fund valuation. An alternative methodology is proposed in which consistency with assets, liabilities, and market values is demanded, with smoothing of the valuation result achieved on an explicit rather than implicit basis. It is then demonstrated that the explicit smoothing parameter can be set so as to achieve the historic smoothness framework for establishing pension fund investment policy.In conclusion the paper suggests greater emphasis on market-related methodologies for compliance valuations and leaves open the choice of methodology for management valuations and monitoring purposes, on the grounds that there is a large subjective element in any realistic basis. However, it is demonstrated that while smoother than unadjusted market-related methods, other aspects of the dynamics of the funding level under the method of Day & McKelvey can be perverse and it is suggested that this method should not be allowed to dictate investment decisions.
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Czaplińska, Mirosława, Małgorzata Rymarzak, and Dariusz Trojanowski. "Fuel Station Valuation under Polish and RICS Standards." Real Estate Management and Valuation 25, no. 2 (June 27, 2017): 20–32. http://dx.doi.org/10.1515/remav-2017-0010.
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Abstract In the last few years, there has been a visible change in the structure of the fuel station market in both Poland and the United Kingdom. The changes taking place both in the fuel station market structure and the management forms of fuel stations, along with the increasing significance of convenience goods sales, result in the necessity of verifying the existing Polish valuation standards of the income approach. Moreover, there is an urgent need to develop specific fuel station valuation guidelines. Fuel station valuation requires both the specific approach and profits method adjustment to be able to account for the specificity of the valuation. The universal character of property valuation in Poland cannot result in ignoring the specificity of fuel station valuation and the market where it operates. Property valuers undertaking valuations of this type of facilities must be familiar with the rules operating on the fuel station market. This paper focuses on the comparison analysis of the fuel station market structure in Poland and the United Kingdom along with the specificity of the way fuel stations operate. Its emphasis is on the comparison analysis of fuel station valuation methods under Polish and RICS standards in order to show their similarities and differences. The aim of the paper is to present the methods of fuel station valuation in Poland and the United Kingdom, though mainly to show the areas of changes in the Polish valuation standards with regards to the profits method under the income approach that would take into account the specificity of fuel stations and their market.
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Kucharska-Stasiak, Ewa. "Valuation Schools and the Evolution of the Income Approach. An Evaluation of Change Trends." Real Estate Management and Valuation 27, no. 2 (June 1, 2019): 66–76. http://dx.doi.org/10.2478/remav-2019-0016.
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Abstract The income approach is the subject of debates conducted by academics and practitioners as one of the most controversial approaches in valuation practice. It is also somewhat differently understood by the three historically shaped valuation schools (US, British and German). This article compares the main assumptions underpinning the income approach’s investment method between the three schools in order to: 1) determine why the assumptions change and in what direction; 2) assess the advantages and disadvantages of explicit cash flows; and 3) evaluate the advisability of incorporating explicit cash flows into Polish valuation methodology. A thesis is formulated that, in Poland, the investment method should use implicit cash flows for estimating the market value of properties. There is a need to include explicit cash flow in university programs, but their use should be limited to valuations undertaken to determine the investment value of a property or the market value of portfolio properties, as well as valuations carried out for the purposes of financial reporting as required by EU legislation (MSSF 13 and MSR 40). The article was prepared based on the review and analysis of the relevant literature.
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D’AMATO, Maurizio. "INCOME APPROACH AND PROPERTY MARKET CYCLE." International Journal of Strategic Property Management 19, no. 3 (October 9, 2015): 207–19. http://dx.doi.org/10.3846/1648715x.2015.1048762.
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This paper is focused on a proposed valuation method including real estate market cycle analysis in real estate valuation process. Starting from early works on this field (d'Amato 2003) the work highlight the dangerous gap between academic research on property market cycles and professional practice of property valuation. The danger of this gap comes from the fact that in spite it is well documented that the property market has a “natural” cyclical behaviour, the opinions of value based on income approaches still relies on assumption of a stable or perpetually growing (or decreasing) income. This may be one generating factors of the real estate bubble and the subsequent financial markets crisis experienced recently. This paper offers a general introduction on cyclical capitalization as a further family of valuation methodologies based on income approach. This method includes in the traditional Dividend Discount Model more than one g-factor in order to plot property market cycle. An empirical application of Cyclical Capitalization is offered to the office market of the Eastern London.
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Joshi, Dhruv. "Intellectual Property Valuation Using Income Approach Method for Technology Licensing." Information Management and Business Review 3, no. 6 (December 15, 2011): 302–14. http://dx.doi.org/10.22610/imbr.v3i6.947.
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Technology licensing is one of the key transactions that enable translation of R&D investments into profits by commercialization of technology. The elementary economics of such transaction suggests that while a licensor attempts to derive benefits greater than the cost of development of the technology protected by IPR, in exchange of monopoly rights, the licensee attempts to minimize the license value to ensure higher profits. This leads to the requirement of valuation of the technology by either party. This paper presents some of the key characteristics related to intellectual property valuation and an analysis of the income method approach in estimating the profitability of commercialization of a technology involving a patent.
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Gadawska, Jolanta. "Effect of Provisions on the Valuation of a Company." Equilibrium 6, no. 2 (June 30, 2011): 109–24. http://dx.doi.org/10.12775/equil2011.015.
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Provisioning means the evaluation of future costs and losses, the estimation of future liabilities towards one’s surroundings, an increase in equity, as well as the real value of assets. During asset valuation, the reserve balance may cause a reduction of the company's value - net assets. This could be a change of a few percentage points. Non-balance provisions cause a decrease in the value of assets, from which liabilities and reserves will be deducted. The value of the enterprise – through asset evaluation – will be lower by a few percentage points. However, it is supplementary capital (capital protection) which has the greatest importance in the methods a company uses in the valuation of assets. As research indicates, retained earnings and additional capital make up 30 -59% of owners equity. When using the multiplier method, reserves have a small indirect effect on the amount of dividends, net income decrease, etc. – due to the reducing of the financial result and taxes. The mixed method takes up an important position in the valuation of a company’s goodwill. Therefore, the relevance of provisions in this valuation, will be lower than the during the valuation of assets. When valuating income reserves do not play a significant role. They are taken into consideration during the adjustment of the financial result, directing it towards cash flow, and for determining the financial outflows in the form of income tax. Provisions may also have a slight influence on the cost of the capital of the enterprise, i.e. a factor discounting cash flow. Provisions are not cash outflows and therefore, in the most popular income methods, they do not play a significant role. Reserves that are tax-deductible costs may affect the amount of tax burdens and thus indirectly affect the cash flow. The biggest and most direct effect of provisions on the valuation of a company can be observed in the asset methods as well as in the mixed methods. However, in the reserve multiplier methods affect the value of the multiplier element of a listed company and the value of the company measured the base element.
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Magaev, Nikolay A., Gagik M. Mkrtchyan, and Larisa V. Skopina. "Real Options Valuation of Deposits." World of Economics and Management 19, no. 2 (2019): 31–48. http://dx.doi.org/10.25205/2542-0429-2019-19-2-31-48.
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Income approach based on the method of discounted cash flows (DCF) seems to be the main instrument to evaluate economic efficiency of investment projects when developing oil and gas fields. However, at early stages of exploration and exploitation of hydrocarbon resources, uncertainty and risks of investors are very high, which limits the use of traditional methods. It is necessary to develop valuation tools accounting high uncertainty of input data on the exploitation of oil and natural gas resources, flexibility of their development by formation of rational production strategy with volatility of the operating parameters such as the world oil prices and the size and value of oil and gas reserves. In this article presents the real options approach which accounts the potential of flexible and adaptive project management providing advantages in assessing development projects as compared to the traditional income methods. Implementation of this method is exemplified by the case of oil and gas fields in the east of the Siberian platform.
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Michaletz, Vladimir, and Andrey I. Artemenkov. "The transactional asset pricing approach." Journal of Property Investment & Finance 37, no. 3 (April 10, 2019): 255–88. http://dx.doi.org/10.1108/jpif-10-2018-0078.
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Purpose The purpose of this paper is to present a methodology based on the transactional asset pricing approach (TAPA) and to illustrate the application of TAPA within the context of professional property valuation. Design/methodology/approach The TAPA is a novel analytical valuation methodology recasting the traditional derivations of the income approach techniques, including DCF, from a transactional perspective based on the principle of inter-temporal transactional equity, instead of the conventional investor-specific view originating from I. Fisher (1907, 1930). Findings The authors present DCF analysis as a specific case of a more general TAPA approach to valuation under the income method. This also leads to novel analytical derivations of the Direct income capitalization, Gordon, Inwood, Hoskold and Ring models. Based on the TAPA framework, the authors also research the value-enhancing effects of benchmark market volatility on the subject property value and conclude that such effects can be statistically significant depending on the DCF analysis period. Research limitations/implications The research has a direct bearing on time-variable discount rate forecasting capabilities, as it uses a time-variant structure for the discount rates. Practical implications Using the US Case-Shiller and BLS rental indices as a valuation benchmark, the paper contains an example of applying the general TAPA framework to value a notional property under a TAPA’s DCF version. Such property valuations can be easily replicated in practice – especially in the context of equitable/fair value determination under the International Valuation Standards Council valuation standards. Social implications TAPA is a deductive principles-based theory of asset valuation especially fit for the transactional and illiquid asset valuation contexts – thus enabling a more efficient pricing for such assets in a sense of reflecting the transactional interests of the parties more closely than achievable under the conventional valuation methods. Originality/value TAPA is an original filiation of research with roots going as far back as Aristotelian Catallactics. It contains analytical formalizations of certain transactional equity principles.
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Růžičková, Kamila. "Application of income valuation methods: Value spread vs. net income." Ekonomická revue - Central European Review of Economic Issues 16, no. 4 (December 31, 2013): 239–44. http://dx.doi.org/10.7327/cerei.2013.12.04.
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Pawlak, Zbigniew, and Andrzej Smoleń. "Valuation Methods of Sports Companies." Physical Culture and Sport. Studies and Research 46, no. 1 (December 1, 2009): 243–53. http://dx.doi.org/10.2478/v10141-009-0021-1.
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Valuation Methods of Sports CompaniesThe valuation of sports companies is indispensable during commercial buy and sell transactions, restructuring processes, determining premiums for the purposes of property insurance.For the valuation of sports companies four approaches are possible i.e. assets-based, income-based, market-based and mixed-valuation approaches. For each approach there are specific company valuation methods. Using real-life examples, this paper discusses the following sports companies' valuation methods: book value, adjusted book value, replacement, liquidation, capitalized profit, discounted cash flow, comparative worth, market multiples and German valuation method. The mixed approach using the German method is applied when the output prices from conventional company valuation methods vary too much, and differences in values exceed 25%.From the management accounting perspective the skilful application of valuation methods to sports companies should be regarded as one of the prerequisites for effective management of sports companies.
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Stevcevska Srbinoska, Dusica, Angela Ljamova, and Snezhana Hristova. "Factors Affecting the Adoption of Inventory Cost Flow Method by the Macedonian Companies: FIFO, Weighted Average, and Specific Identification Method." Studia Universitatis Babeș-Bolyai Negotia 65, no. 3 (September 30, 2020): 31–76. http://dx.doi.org/10.24193/subbnegotia.2020.3.02.
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"Inventory valuation is a major topic in the accounting practice. Inventory valuation is reflected in financial reporting, i.e. the balance sheet and the profit and loss account and the choice of the right inventory cost flow method is one of the basic decisions all companies engaged in manufacturing and distribution of goods need to make. Preferably, the chosen method should result in the best income and financial result measurement. However, no method is acknowledged to always be the best for accomplishing these objectives. The main aim of this paper is to investigate the factors affecting the adoption of inventory cost flow method by Macedonian companies. The data was collected by using a questionnaire randomly distributed via email to Macedonian retailing and manufacturing companies and later examined through statistical methods. Analyzing a pool of 56 respondents, we find that the subject of inventory valuation is important as most of the participants consider that they understand the existing inventory valuation methods. The choice of inventory valuation method is mostly affected by the level of education of the manager, understanding of the method and simplicity of the separate inventory valuation methods. Key words: Inventory, valuation, methods, FIFO, weighted average, specific identification; JEL classification: M4, M1 "
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Sriram, M. "City Union Bank: Residual Income Approach to Valuation." Vision: The Journal of Business Perspective 24, no. 3 (August 29, 2020): 371–75. http://dx.doi.org/10.1177/0972262920953750.
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The case study is about the valuation of one of the profitable banks in southern India, City Union Bank Ltd (CUB). The bank was adjudged as the ‘best small bank’ by BusinessWorld’s Best Banks Survey 2016. The bank has seen a meteoric rise in its stock price during the period 2013–2017 and outperformed other banks in the industry in terms of non-performing assets (NPA), return on assets, capital adequacy ratio (CAR) and so on. The stock has been attracting the attention of the investing fraternity. An analyst is assigned the job of valuing CUB’s stock. Residual income valuation method is employed for valuation and facilitates in decision-making. The valuation exercise involves projection of financials and estimation of cost of equity, terminal growth rate and residual income. The case also considers other key parameters associated with the banking sector in decision-making.
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Ostoj, Jan. "Risk Premium for Loss of Employment within Region." ASEJ Scientific Journal of Bielsko-Biala School of Finance and Law 22, no. 4 (January 23, 2019): 22–26. http://dx.doi.org/10.5604/01.3001.0012.9685.
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On the basis of the income-based valuation method of intellectual capital of the region in the previous papers, the author discovers a need for a valuation of the risk premium which should be included in the rate that discounts income from work. Undoubtedly, both the loss of employment and the amount of income from work contribute to the intuitive calculation in the economic migration. The income-based valuation of the right to a certain sequence of income at a certain risk level properly integrates these factors as one value, providing a clear criterion of selection. Due to the fact that the labour market does not generate the values that allow the adaptation of the CAPM model, there was offered the original method of the risk premium valuation which provides the results analogous to those based on the CAPM model, and it was applied for the particular provinces in Poland. As a result, there was revealed the equity premium puzzle of the Polish labour market. Because of the significant amount of estimates, the obtained results are the first step towards the problem.
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Almabekova, Olga, Roman Kuzmich, and Elena Antosik. "Income Approach to Business Valuation: Russian Perspective." Zagreb International Review of Economics and Business 21, no. 2 (November 1, 2018): 115–28. http://dx.doi.org/10.2478/zireb-2018-0017.
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Abstract In crisis times, making the choice of a company to invest becomes challenging for a potential investor due to the uncertainty of business environment and dim future prospects. As for industries, the decision is often made in favor of the companies satisfying consumers’ basic needs. The value of a business is known to be the main indicator of the company’s reliability and investment attractiveness. The article provides substantiation of the reliability of income approach for business valuation in the time of economic crisis in Russia and presents an algorithm for implementing the cash flow discounting method within the framework of income approach using the case for a middle-sized construction company. The choice of the object for the research is due to the investment attractiveness of the construction industry in a big industrial city of Krasnoyarsk in the North East of Russia.
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Graves, Philip E. "Nonoptimal Levels of Suburbanization." Environment and Planning A: Economy and Space 35, no. 2 (February 2003): 191–98. http://dx.doi.org/10.1068/a3577.
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Suburbanization has many causes, among which is the attempt to relocate to acquire a more desirable vector of local public goods. The traditional economists' procedure for valuing public goods involves vertical aggregation of marginal willingness to pay, at a given income level. This approach is flawed by failing to recognize that individuals will not work for goods that cannot be acquired individually with higher incomes. There will be a parallel input market failure any time there is a public good output market failure, thus the ‘given income’ of the traditional valuation method is too low. Hence, traditional valuation methods result in underprovision of local public goods (for example, parks, safety, education, and environmental quality) at the urban centers. As a consequence, there will be nonoptimally large levels of suburban sprawl with substantial resulting welfare loss.
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Simanjuntak, Erni Br, and Gede Harja Wasistha. "VALUATION OF AERONAUTICS AND SPACE TECHNOLOGY AT LAPAN." AFEBI Economic and Finance Review 4, no. 01 (September 12, 2019): 1. http://dx.doi.org/10.47312/aefr.v4i01.212.
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<p><em>New challenges arises for government institutions engaged in research and engineering to continuously innovate and develop technologies that have competitive advantages and provide income for the country through royalty from licensed technology. This research carried out to valuate the aeronautics and space technology. The objective of the study is to develop appropriate intellectual property valuation methods. This research is a case study utilizing sequential mix method which is the combination of quantitative and qualitative research. By using intellectual capital theory, this research-broaden the literatures on the technology valuation in the field of aeronautics and space. This study fills research gap on the existing technology valuation method that is still partially conducted by government research and development. </em></p><p><em>This study discusses the value of intangible assets and licenses from intellectual property that are calculated through three valuation approaches, such as cost-based approach, income-based approach, and market-based approach. The results of the study show that the most appropriate intellectual property valuation method are the cost-based approach and income-based approach.</em></p><p><strong><em>JEL Classification: </em></strong><em>O30, O31, O33</em><strong></strong></p><strong><em>Keywords</em></strong>: <em>Cost Based Approach,</em><em> Income Based Approach, Intellectual Property, Market Based Approach, Sequential Mix Method </em>
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Kazak, Jan, Jarosław Malczyk, David Garcia Castro, and Szymon Szewrański. "Carbon Sequestration in Forest Valuation." Real Estate Management and Valuation 24, no. 1 (March 1, 2016): 76–86. http://dx.doi.org/10.1515/remav-2016-0007.
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Abstract Strong links between the condition of the environment and the economy have recently resulted in a number of actions aiming to implement environmental considerations in economic calculations. This is accompanied by the development of the concept of ecosystem services, characterizing the benefits that the environment provides humankind with. The identification of these services is reflected in their economic values. Hence, the concept of the valuation of ecosystem services. Therefore, if the service provided by the environment takes on a financial value, we can consider it as income from the property containing the analyzed ecosystem. Of course, in order to speak in practice of the income approach in the valuation of such properties, there must be actual financial flow as income for the real estate owner. However, in the era of big economic changes and the implementation of a number of financial instruments (e.g., subsidies for a particular use of property, trade of CO2 emission rights), it seems reasonable to consider the possibility of property valuation by the valuation of ecosystem services. A part of this research focused on a service of forest ecosystems service that is carbon sequestration. The selection was made due to the implementation of the climate policy at the European level and its association with the trade of CO2 emission rights. The analyses were performed for two test sites characterized by different determinants (composition of species in the tree stand, age of the stand, degree of compactness of the tree stand, etc.). The low level of difficulty of the test methods used enables non-experts (persons with no qualifications in forestry) to carry out valuations themselves. The research is a contribution to the debate on the possibility of accounting for carbon sequestration in forest property valuation based on the income approach, but the issue still requires clarification of certain elements.
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Myers, James N. "Implementing Residual Income Valuation With Linear Information Dynamics." Accounting Review 74, no. 1 (January 1, 1999): 1–28. http://dx.doi.org/10.2308/accr.1999.74.1.1.
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Residual income (RI) valuation is a method of estimating firm value based on expected future accounting numbers. This study documents the necessity of using linear information models (LIMs) of the time series of accounting numbers in valuation. I find that recent studies that make ad hoc modifications to the LIMs contain internal inconsistencies and violate the no arbitrage assumption. I outline a method for modifying the LIMs while preserving internal consistency. I also find that when estimated as a time series, the LIMs of Ohlson (1995), and Feltham and Ohlson (1995) provide value estimates no better than book value alone. By comparing the implied price coefficients to coefficients from a price level regression, I find that the models imply inefficient weightings on the accounting numbers. Furthermore, the median conservatism parameter of Feltham and Ohlson (1995) is significantly negative, contrary to the model's prediction, for even the most conservative firms. To explain these failures, I estimate a LIM from a more carefully modeled accounting system that provides two parameters of conservatism (the income parameter and the book value parameter). However, this model also fails to capture the true stochastic relationship among accounting variables. More complex models tend to provide noisier estimates of firm value than more parsimonious models.
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Bogatyrev, S. Yu. "Analysis of manipulations when applying the income approach method to valuation." Financial Analytics: Science and Experience 12, no. 3 (August 30, 2019): 338–51. http://dx.doi.org/10.24891/fa.12.3.338.
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Evans, David John, Erhun Kula, and Yoko Nagase. "The social valuation of income: a survey approach." Journal of Economic Studies 41, no. 6 (November 10, 2014): 808–20. http://dx.doi.org/10.1108/jes-01-2013-0011.
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Purpose – The purpose of this paper is to estimate survey-based values of the elasticity of marginal social valuation of income, an important welfare parameter in cost-benefit analysis. Design/methodology/approach – A model relating equity welfare weights to income is developed, and iso-elasticity of marginal valuation of income is tested using survey data obtained from a sample of Turkish politicians who are instrumental in policy making. Findings – Based on the survey feedback, formal statistical testing indicates that Turkish politicians, regardless of party allegiance, reveal preferences consistent with an iso-elastic marginal social valuation of income. The estimated value of the elasticity measure is close to unity for each of the political parties. Originality/value – The originality of the paper is in terms of the survey method used to obtain from Turkish politicians estimates of the marginal social valuation of income. This welfare parameter is needed in the calculation of both social discount rates and welfare weights. The paper will be of interest to academics in the field of welfare economics as well as to practitioners involved in the appraisal of social projects and policies.
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Jenkins, David S., and Gregory D. Kane. "A Contextual Analysis of Incomeand Asset-Based Approaches to Private Equity Valuation." Accounting Horizons 20, no. 1 (March 1, 2006): 19–35. http://dx.doi.org/10.2308/acch.2006.20.1.19.
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The question of how to best value privately held businesses for purposes of taxation and other legal reasons remains open to debate. In general, valuation models are asset-based, income-based, or hybrid models that aggregate asset and income information. An example of the latter is the controversial excess earnings method recommended by IRS Rev. Rul. 68–609. In this research, we focus on the relative performance of the excess earnings method vis-a`-vis other widely used valuation models. We consider the valuation accuracy of each model in a general setting along with examining contextual performance under varying levels of intangible versus tangible assets and varying levels of business profitability. We show that the hybrid model provides superior valuation accuracy in general and more consistent valuation accuracy across the contexts examined. We also show that the inclusion of two capitalization rates in the excess earnings method, which is required in order to distinguish returns from tangible versus intangible assets, provides increasing relative valuation accuracy over that of the single-rate earnings capitalization model as the two rates diverge. In summary, we demonstrate that for privately held firms, which typically lack analyst following and independent earnings forecasts, the excess earnings method represents a viable valuation alternative.
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Gružauskas, Valentas, Andrius Kriščiūnas, Dalia Čalnerytė, and Valentinas Navickas. "Analytical Method for Correction Coefficient Determination for Applying Comparative Method for Real Estate Valuation." Real Estate Management and Valuation 28, no. 2 (June 1, 2020): 52–62. http://dx.doi.org/10.1515/remav-2020-0015.
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AbstractReal estate valuation uses 3 main approaches: income, cost and comparative. When applying the comparative method, correction coefficients based on similar real estate transactions are determined. In practice, the coefficients and similar real estate objects are usually determined by using qualitative approach based on the valuators’ experience. The paper provides an analytical method for the determination of correction coefficient, which limits subjectivity when using the comparative method for valuation. The provided analytical approach also integrates macroeconomic indicators in the calculation process. It also addresses issues when available historical real estate transaction data is limited. A machine learning approach was applied to determine the average price of real estate in the region, with the possibility of using this information to obtain correction coefficients where historical data was unavailable. Alternative research usually focuses on final price estimation of the selected real estate object; however, the valuation standard of Tegova released in 2018 does not allow for applying analytically based approaches for individual real estate object evaluation; these approaches can be used only as a supportive tool for valuators.
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Węgrzyn, Halina, and Paweł Bołtuć. "Brand valuation by using income method for example service companies – case study." Scientific Papers of Silesian University of Technology. Organization and Management Series 2017, no. 100 (2017): 539–51. http://dx.doi.org/10.29119/1641-3466.2017.100.41.
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Karminsky, A., and E. Frolova. "Methods of Bank Valuation in the Age of Globalization." MGIMO Review of International Relations, no. 3(42) (June 28, 2015): 173–83. http://dx.doi.org/10.24833/2071-8160-2015-3-42-173-183.
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This paper reviews the theory ofvalue-based management at the commercial bank and the main valuation methods in the age of globalization. The paper identifies five main factors that significantly influence valuation models selection and building: funding, liquidity, risks, exogenous factors and the capital cushion. It is shown that valuation models can be classified depending on underlying cash flows. Particular attention is paid to models based on potentially available cash flows (Discounted cash flow-oriented approaches, DCF) and models based on residual income flows (Residual income-oriented approaches). In addition, we consider an alternative approach based on comparison with same sector banks (based on multiples). For bank valuation equity discounted сash flow method is recommended (Equity DCF). Equity DCF values equity value of a bank directly by discounting cash flows to equity at the cost of equity (Capital Asset Pricing Model, CAPM), rather than at the weighted average cost of capital (WACC). For the purposes of operational management residual income-oriented approaches are recommended for use, because they are better aligned with the process of internal planning and forecasting in banks. For strategic management residual income-oriented methods most useful when expected cash flows are negative throughout the forecast period. Discounted сash flow-oriented approaches are preferable when expected cash flows have positive values and needs for models using is motivated by supporting the investment decisions. Proposed classification can be developed in interests of bank management tasks in the midterm in the age of globalization.
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Hopkins, Patrick E., Richard W. Houston, and Michael F. Peters. "Purchase, Pooling, and Equity Analysts' Valuation Judgments." Accounting Review 75, no. 3 (July 1, 2000): 257–81. http://dx.doi.org/10.2308/accr.2000.75.3.257.
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We provide evidence that analysts' stock-price judgments depend on (1) the method of accounting for a business combination and (2) the number of years that have elapsed since the business combination. Consistent with business-press reports of managers' concerns, analysts' stock-price judgments are lowest when a company applies the purchase method of accounting and ratably amortizes the acquisition premium. The number of years since the business combination affects analysts' price estimates only when the company applies the purchase method and ratably amortizes goodwill—analysts' price estimates are lower when the business-combination transaction is further in the past. However, this joint effect of accounting method and timing is mitigated by the Financial Accounting Standards Board's proposed income-statement format requiring companies to report separate line items for after-tax income before goodwill charges and net-of-tax goodwill charges. When a company uses the purchase method of accounting and writes off the acquisition premium as in-process research and development, analysts' stockprice judgments are not statistically different from their judgments when a company applies pooling-of-interest accounting.
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Zhuk, Valeriy, and Yulia Bezdushna. "Priority approaches for assessment of land assets in agriculture." Environmental Economics and Sustainable Development, no. 7(26) (2020): 68–76. http://dx.doi.org/10.37100/2616-7689/2020/7(26)/9.
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The publication focuses on prioritizing approaches to fair (market) valuation of agricultural land in financial and statistical reporting, as a factor in pricing its market turnover and capitalization in Ukraine's national wealth. Types of land valuation that are differentiated according to the purpose, methodology and purpose of the results are generalized. The procedure of soil boning, economic, regulatory and expert monetary evaluation of land plots is described. Priorities in approaches to land valuation for different purposes have been identified. It is concluded that the income approach, in particular the method of direct capitalization of rental income, is a priority in the assessment of agricultural land. Indicators for estimation of arable land by the method of capitalization of rent income, the procedure of their calculation of the source of information that we used in the process of testing these methodological approaches on a scale of Ukraine are generalized. A methodology for valuation of agricultural land for financial reporting purposes is proposed. The mechanism of introduction of the system of sectoral land valuation system, which is formed as an industry portal and functions under the regulatory and methodological support of state regulatory institutes with the aggregation of the available and most effective valuation methods and statistical databases, is substantiated. It is concluded that such a mechanism, with appropriate tools, will facilitate the capitalization of key domestic national wealth – agricultural land and provide for the possibility of price regulation of minimum and maximum prices when opening the relevant market. The priority approach to the assessment in this mechanism identified one that provides consideration of the value and market factor and the natural fertility and economic efficiency of the Ukrainian black earth.
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Epifanov, E. S., and N. Z. Atarov. "Methods of valuation for an Internet business." Voprosy regionalnoj ekonomiki 30, no. 1 (March 20, 2017): 83–89. http://dx.doi.org/10.21499/2078-4023-2017-30-1-83-89.
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This article presents a description of the main methods of valuation Internet business: a comparative approach, the income approach, the cost approach; and provides guidance on the valuation of Internet projects.
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Kissinger, John N. "In Defense of Interperiod Income Tax Allocation." Journal of Accounting, Auditing & Finance 1, no. 2 (April 1986): 90–101. http://dx.doi.org/10.1177/0148558x8600100202.
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This paper views deferred income taxes as a summary measurement correction that adjusts the various income statement items to an aggregate net-of-tax valuation. Further, the author observes that the tax effects of revenue timing differences are conceptually distinct from the tax effects of expense timing differences and concludes that the FASB should adopt a combination method of comprehensive interperiod allocation.
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Cheng, An-Chin. "A FUZZY MULTIPLE CRITERIA COMPARISON OF TECHNOLOGY VALUATION METHODS FOR THE NEW MATERIALS DEVELOPMENT." Technological and Economic Development of Economy 19, no. 3 (October 3, 2013): 397–408. http://dx.doi.org/10.3846/20294913.2013.821687.
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New materials have been recognized as key drivers for corporate profitability and growth in today's fast changing environment. To evaluate the development and gain useful appraising information of new materials thus becomes a critical issue. However, little has been done in discussing the selection of technology valuation methods for the development of new materials. Accordingly, this study adopted the fuzzy AHP method to obtain the opinions of professionals on this issue. These efforts resulted in seven evaluation criteria with one, the “data validity” being given the highest weight, followed by “method adaptability” and “technology development evaluability”. It was concluded that the real option approach and income method are the two most applicable technology valuation methods for evaluating new materials development. In addition, the application of the fuzzy AHP method provided a relevant avenue for corporation policy makers and researchers to evaluate the technology valuation methods for new materials.
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Reinert, Jan. "Comparison of the DCF and German income approach." Journal of Property Investment & Finance 37, no. 1 (February 4, 2019): 58–71. http://dx.doi.org/10.1108/jpif-04-2018-0025.
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Purpose The majority of institutional investors in Germany use the German income approach (GIA) while investors abroad prefer the discounted cash flow (DCF). The debate around the two methods has been largely theoretical, lacking large-scale empirical evidence. The paper aims to discuss this issue. Design/methodology/approach The analysis consisted of a performance comparison and hedonic regressions based on ordinary least squares. Fitted GIA and DCF values were obtained for all observations in the data set in order to eliminate distortions caused by different property characteristics in the two valuation sub-samples. Findings The research hypothesis, stating that the two methods result in statistically identical estimations of value, was rejected. The performance analysis showed that GIA valuations displayed smoother total return performance due to less volatile capital growth in comparison to DCF valuations. Comparing the fitted values obtained from the regressions showed that GIA valuations were on average lower than their DCF counterparts. The difference was small and both methods resulted in very similar fitted values. The difference between fitted values was not constant over time and decreased toward the end of the analysis period. Practical implications The research adds empirical arguments to the ongoing debate between GIA and DCF valuations. So far empirical proof has been scarce or one-sided. Originality/value This analysis is the first large-scale empirical comparison of the DCF and the GIA within the same market.
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Renigier-Biłozor, Małgorzata, and Maurizio d’Amato. "The Valuation of Hope Value for Real Estate Development." Real Estate Management and Valuation 25, no. 2 (June 27, 2017): 91–101. http://dx.doi.org/10.1515/remav-2017-0016.
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Abstract In the valuation of a property subject to development, the valuer may consider the potential aspect of the value of both land to be improved and a building to be refurbished. These kinds of valuations are complex, especially when a prudent assessment of value is required. In general terms, all properties may have potential development which, in some cases, can be termed “hope”. In particular, uncertainty regarding the change in the legal framework may create expectations as to the uncertain variation of property value in the future. In these cases, it may be necessary to deal with hope value or future value, trying to reach the value of a property subjected to uncertain changes. Hope value is the difference between the existing use value and the price that the market might pay for future transformation. The main aim of the paper is the elaboration of a methodology to determine the hope value. In this work, a real option model for the valuation of hope value in the real estate market will be applied to a small sample of residential properties located in Olsztyn that are subject to possible transformation. The possibility of a transformation may create expectations and may influence the value of the property. Although the applications of these methods to real estate valuation are fairly recent, the International Valuation Standards have included real option theory in the income approach as a valuation method since 2011.
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Prasetyawati, Naris Dyah, Evi Gravitiani, and Sunarto Sunarto. "Willingnes to Pay dan Ability to Pay Pelayanan Sanitasi di Kota Yogyakarta." Jurnal Teknologi Kesehatan (Journal of Health Technology) 14, no. 2 (November 30, 2018): 71–81. http://dx.doi.org/10.29238/jtk.v14i2.371.
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The sanitary conditions in densely populated settlements such as in Yogyakarta are quite heterogeneous, in terms of both quality and quantity. The parameters in the healthy home assessment include components of the house, sanitation and behaviour. The economic valuation method is one of the ways used to provide a quantitative value of the goods and services produced by natural resources and the environment. The purpose of the study is to determine the valuation of the Contingent Valuation Method (CVM) value. CVM method is one of direct economy assessment methods through Willingness to Pay (WTP) question. This study aims to determine the economic conditions in the settlements in the city of Yogyakarta. This type of research is an observational retrospective design. Samples were 597 families living in the city of Yogyakarta taken by using multi-stage random sampling. Economic valuation data covered income, willingness and ability to pay taps, waste management and effluent treatment from households, were obtained using a questionnaire. The results of this study on the economic valuation of votes obtained WTP of taps water (PDAM) was in the range of 2,500 – 4,000 IDR / 10m3 / month with ATP for 7,585 IDR / 10m3 / month, WTP for garbage levy was in the range of 2,000 - 4,000 IDR/ month with ATP for 13,594 IDR / month, while WTP for wastewater management was in the range of 3,000 IDR/ month with ATP 2,870 IDR/ month. A total of 48.41% survey respondents have an income of less than 1,500,000 IDR per month so that the economic condition of Yogyakarta is in a low category.
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Saptutyningsih, Endah, and Rini Selviana. "Valuing Ecotourism of a Recreational Site in Ciamis District of West Java, Indonesia." JEJAK 10, no. 1 (March 10, 2017): 172–88. http://dx.doi.org/10.15294/jejak.v10i1.9134.
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Ecotourism, as an alternative tourism, involves visiting natural areas in order to learn, to study or to carry out activities environmentally friendly, that is a tourism based on the nature experience which enables the economic and social development of local communities. Ecotourism encourages rural economics and provides benefits to income and employment generation. It is considered as an alternative for enhancing rural lifestyle and for leading positive changes in the distribution of income. One of the area which has ecotourism site in Indonesia is Karangkamulyan site, Ciamis District of West Java. There is a tourist attraction that not only offers natural beauty, history and cool atmosphere, it also serves as a place of education and research on the history in the field of archeology. This attraction should receive special attention from the local government so that the tourists and local people also get the benefits. Ecotourism can be classified as possessing public goods-type characteristics, and as such, welfare benefit estimates must utilize non-market valuation techniques. This study employs the travel cost method and contingent valuation method. Travel cost and contingent valuation methods are applied to the problem of estimating the potential consumer surplus available to tourists from ecotourism in Ciamis. The results are compared with contingent valuation analysis of willingness-to-pay of tourists in their current trip to ecotourism sites of Ciamis. The result of travel cost method indicates that tourists average travel cost is estimated at no more than one hundred thousand rupiahs. The contingent valuation method concludes that the tourists average willingness to pay in their trip to ecotourism sites of Ciamis is are about IDR 6,800 in average.
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Zavadskas, Edmundas Kazimieras, Arturas Kaklauskas, Saulius Raslanas, and Vida Malienė. "THE APPLICATION OF MULTI-CRITERION METHODS FOR VALUATION OF RECREATION PROPERTY/DIE ANWENDUNG DER MEHRKRITERIELLEN METHODE BEI DER BEWERTUNG VON ERHOLUNGSGRUNDSTÜCKEN." JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT 7, no. 4 (August 31, 2001): 327–33. http://dx.doi.org/10.3846/13921525.2001.10531744.
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Multi-criterion valuation methods are widely used in real estate valuation all over the world. In USA, UK and other countries these methods are part of techniques based on comparative and reinstatement values as well as on income use [1]. A number of problems in the valuation of real property can be eliminated by the methods of multiple criteria analysis, which came into existence only at the second half of the 20th century. Currently, they have become very important in the international practice of the real property valuation. In most cases they are based on market modelling and economic assumptions. Therefore, sometimes they are referred to as separate valuation methods, and classified as modern ones. This article describes a new method of multiple criteria analysis. This method based on the market analysis and valuation principle is in line with the traditional comparative value method, therefore it can be attributed to the group of the indirect comparative value methods. These methods facilitate the universal and more extensive multiple criteria analysis of the property, since they take account of a number of different criteria, ie qualitative, quantitative ones, market conditions. The proposed method can meet the demands and needs of many interested groups since it enables to estimate not only the market value of the property, but also other values, eg investment value, value of use, market value of the current use of the property, etc. This article analyses the theoretical model of the method, which was used to estimate the market value of the recreation premises.
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Malienė, Vida, Edmundas K. Zavadskas, Artūras Kaklauskas, and Saulius Raslanas. "PROPERTY VALUATION BY MULTIPLE CRITERIA METHODS/NEKILNOJAMOJO TURTO VERTINIMAS DAUGIAKRITERINIU METODU." JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT 5, no. 4 (August 31, 1999): 272–84. http://dx.doi.org/10.3846/13921525.1999.10531475.
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Multiple criteria valuation methods are widely used in real estate valuation all over the world. In USA, UK and other countries these methods are part of techniques based on comparative and reinstatement values as well as on income of use. They are used in valuating various property characteristics, ie its location or obsolescence degree. In Germany, however, multiple criteria valuation technique refers to a separate group of property valuation methods applied when market data are unavailable or insufficient (ie purchasing, selling or renting prices are not known). The above methods have been used for real estate valuation since 1976. Dr. H. E. Auerhammer [1] was the first to apply these approaches to solving real estate valuation problem caused by the scarcity of market data. These methods supplemented with systems of criteria developed by other authors were later applied to particular cases when three major commonly used property valuation methods could not be applied. Thus, K. Gablenz [2] suggests using the method described in assessing plots intended for agriculture, while B. Bischoff [3] offers to use it for determining the investments into plots. R. Vogel [4] thinks that the approach may be used for determining the approximate value of land, whereas G. Sommer and P. Zimmermann [5] and Piehler [6] developed a system of criteria to be used as a part of the method described in determining the differences between the value of quantitative and qualitative characteristics of an object and its market value. T. Gierardy and R. Moeckel [7] described the advantages and disadvantages of methods based on multiple criteria analysis. The above methods are widely used in Germany for property valuation, the peak of their application being associated with the unification of East and West Germany in 1990 [8]. Multiple criteria analysis presented in this paper for property valuation may be used to the advantage of various interested parties (see Fig 1). The representatives of various parties including appraisers, buyers, sellers and investors may use it for their particular purposes: appraiser may apply this method to real estate value analysis for determining the market, use and other values of real estate being mortgaged, ensured, privatised, divided or nationalised; investor may rely on it for more efficient use of this property; buyer may use it for choosing property which would satisfy his personal needs to the best advantage; seller has to determine the market price of his property that would ensure its competitive ability on the market. To satisfy all the needs described multiple criteria valuation method presented in the paper may be successfully used. To show its efficiency the solution of a sample problem, representing a real case is provided.
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CARTON DE WIART, B., and M. A. H. DEMPSTER. "WAVELET OPTIMIZED VALUATION OF FINANCIAL DERIVATIVES." International Journal of Theoretical and Applied Finance 14, no. 07 (November 2011): 1113–37. http://dx.doi.org/10.1142/s021902491100667x.
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We introduce a simple but efficient PDE method that makes use of interpolation wavelets for their advantages in compression and interpolation in order to define a sparse computational domain. It uses finite difference filters for approximate differentiation, which provide us with a simple and sparse stiffness matrix for the discrete system. Since the method only uses a nodal basis, the application of non-constant terms, boundary conditions and free-boundary conditions is straightforward. We give empirical results for financial products from the equity and fixed income markets in 1, 2 and 3 dimensions and show a speed-up factor between 2 and 4 with no significant reduction of precision.
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Florêncio, Lutemberg, and Claudio Tavares de Alencar. "Protected Collateral Value: An Approach to Valuation of Commercial Properties for Loan Guarantees." Real Estate Management and Valuation 28, no. 3 (September 1, 2020): 1–11. http://dx.doi.org/10.1515/remav-2020-0019.
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AbstractThe valuation of commercial properties for the guarantee of loans is extremely relevant for financial institutions, since it directly impacts the calculation of the loan to value ratio (LTV). However, despite the vast literature on the subject, the choice of methodological basis and the definition of the type of value to be employed are not pacified issues among researchers and practitioners. In this sense, the main objective of this paper is to present a methodological approach, as well as a suggestion of the type of value for the valuation of commercial properties bound collateral.The main methods and types of values related to the valuation of bound collateral commercial properties are presented below. Next, we propose a refinement of the income method, based on the concept of the value of the investment opportunity and under the principle of value at risk. Finally, we promote a case study with data from the Brazilian market to illustrate the application of the proposed approach.Based on the case study, it was evidenced that the valuation approach proposed in this paper, anchored in the potential of the income generation of the property, reduces the risk of exposure to banks’ credit.
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Kolankov, Sergey V., Svenlana P. Voronova, and Ulia A. Golikova. "Development of Methods of Assessing the Land Market Value." Materials Science Forum 931 (September 2018): 1137–41. http://dx.doi.org/10.4028/www.scientific.net/msf.931.1137.
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This article discusses methods for assessing the market value of land plots used in a comparative and income approaches. The comparative approach includes the sales comparison approach, the method of allocation and the method of distribution. The income approach includes the method of capitalization of land rent, the balance (residual) method and the method of intended use. The work analyzes the content of normative legal acts used to determine the market value of this type of property. Basically this is the provisions of the Guidelines (methodological recommendations) for determining the market value of land plots. As a result of the analysis, the authors suggest the main directions for the development of existing methods used in valuation activities.
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Muryani, Muryani. "ECONOMIC ANALYSIS OF HERITAGE TOURISM AT OLD TOWN AREA SURABAYA." Journal of Developing Economies 4, no. 1 (June 10, 2019): 8. http://dx.doi.org/10.20473/jde.v4i1.11452.
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AbstractThis study is an application of cultural heritage valuation using non-market methods. Contingent Valuation Method used to measure the amount of economic value by estimating willingness to pay from Surabaya residents. The economic value of the Old Town Area of Surabaya if there were improvementanddevelopment of heritage tourism is Rp. 1.471.764 billion.This value is greater than before improvement and development that is only Rp. 3.914.892.240. Multinomial logit regression was used to identify factors that affect the interest to visit and willingness to pay for the respondent. Results indicates that age, education, income, and knowledge significantly influence the interest to visit and willingness to pay. Therefore, it is necessary to encourage the development of heritage tourism, having regard to the determination of stakeholder and policy priorities.The method used in the determination of stakeholder and policy priorities is the Analytic Hierarchy Process.Overall, the use of three methods provide complete results so it can be a reference in the field of cultural heritage research and advice in the development of heritage tourism, especially in the old city area of Surabaya.Keywords: economic valuation, multinomial logistic regression, contingent valuation method, analythical hierarchy process.
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Kharroubi, Samer A. "Modeling SF-6D Health Utilities: Is Bayesian Approach Appropriate?" International Journal of Environmental Research and Public Health 18, no. 16 (August 9, 2021): 8409. http://dx.doi.org/10.3390/ijerph18168409.
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Background: Valuation studies of preference-based health measures like SF6D have been conducted in many countries. However, the cost of conducting such studies in countries with small populations or low- and middle-income countries (LMICs) can be prohibitive. There is potential to use results from readily available countries’ valuations to produce better valuation estimates. Methods: Data from Lebanon and UK SF-6D value sets were analyzed, where values for 49 and 249 health states were extracted from samples of Lebanon and UK populations, respectively, using standard gamble techniques. A nonparametric Bayesian model was used to estimate a Lebanon value set using the UK data as informative priors. The resulting estimates were then compared to a Lebanon value set obtained using Lebanon data by itself via various prediction criterions. Results: The findings permit the UK evidence to contribute potential prior information to the Lebanon analysis by producing more precise valuation estimates than analyzing Lebanon data only under all criterions used. Conclusions: The positive findings suggest that existing valuation studies can be merged with a small valuation set in another country to produce value sets, thereby making own country value sets more attainable for LMICs.
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d'Amato, Maurizio, Nikolaj Siniak, and Giulia Mastrodonato. "“Cyclical assets” and cyclical capitalization." Journal of European Real Estate Research 12, no. 2 (August 8, 2019): 267–88. http://dx.doi.org/10.1108/jerer-05-2018-0022.
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Purpose The purpose of this study is providing a possible methodological solution to the valuation of cyclical.assets. International Valuation Standards introduce a brand new definition of property: the cyclical asset (International Valuation Standards Council 2017, IVS 105, p. 39 and p. 41). Among different property valuation methods, normally this kind of properties is appraised using income approach. In this group of methodology, the opinion of value is based on a proportional relationship between property value and rent. In the past years, a group of methods called cyclical capitalization has been proposed (d’Amato, 2003; d’Amato, 2013;d’Amato, 2015; d’Amato, 2017a; d’Amato 2017 b; d’Amato, 2017c). This method proposes an integration between property valuation and property market cycle. Design/methodology/approach Cyclical capitalization method is applied using a time series of property market rent of offices in prime location in the South Bank area in London. It consists of the determination of more than one all-risk yield to reproduce the property market cycle. Findings A comparison between the cyclical capitalization and two traditional capitalization rate shows how the proposed model is able to provide a stable opinion of value. Research limitations/implications The method may represent a contribution for the determination of the value of cyclical assets or for the mortgage lending value. Practical implications This paper provides the possibility to have a property valuation method less sensitive to upturn and downturn of the property market. Social implications The valuation based on cyclical capitalization are less sensitive to the upturn and the downturn of the market. Originality/value It is one of the first scientific paper addressing the problem of the determination of the value of cyclical assets.
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Tiziana, De-Magistris, Akaichi Faical, and Youssef Kamel Ben. "Testing the effectiveness of the oath script in reducing the hypothetical bias in the Contingent Valuation Method." Agricultural Economics (Zemědělská ekonomika) 62, No. 8 (July 15, 2016): 378–84. http://dx.doi.org/10.17221/174/2015-agricecon.
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The objective of the study is to investigate the effect of the oath script (HO) in an hypothetical Contingent Valuation survey in a Mediterranean country (e.g. Italy). Hence, there were conducted the CE surveys with three treatments: (1) CV without a cognitive task, (2) CV with a CT script, and (3) CV with a HO. The findings showed that the effectiveness of the HO script depends on the participants’ socio-demographic characteristics. For instance, it was found that the HO script could help to reduce the hypothetical bias for people who possess a high educational level in contrast with those people with low education and low income. Hence, the findings suggest that the oath script not only does not a guarantee the reduction of the hypothetical bias, but it also does not explain the mixed results found in the previous studies.
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Fattinnanzi, Enrico, Giovanna Acampa, Fabrizio Battisti, Orazio Campo, and Fabiana Forte. "Applying the Depreciated Replacement Cost Method When Assessing the Market Value of Public Property Lacking Comparables and Income Data." Sustainability 12, no. 21 (October 29, 2020): 8993. http://dx.doi.org/10.3390/su12218993.
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The growing interest in the enhancement, management, and sale of public building stock has increased the importance of their valuation and, as a result, the need to identify suitable methods for estimating value that take into account their peculiarities. They often boast architectural features (interfloor distance, layout, finishings, types of wiring/heating systems, etc.) that make them ‘extraordinary’ assets; in some cases, these features also endow them with monumental and/or historical importance. Thus, when valuating, it is necessary to adopt suitable methods. Where comparable examples or income-based parameters specifically concerning buildings with special features are lacking, the Depreciated Replacement Cost (DRC) method is the only system that can be used to estimate their market value. This paper aims to show how the DRC method can be applied in this specific market. The theoretical part will be coupled with a practical section where the DRC method will be used to estimate the market value of an extraordinary landmark building in Rome (Italy), the Palazzo degli Archivi di Stato (the State Archives building), in the EUR district, sold by EUR S.p.A. group (formerly known as Ente EUR) in 2015.
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Mar Iman, Abdul Hamid. "Catchment-to-Intake-Point Economic Valuation of Water Resources Using a Hybrid Method." Journal of Tropical Resources and Sustainable Science (JTRSS) 4, no. 1 (August 8, 2021): 10–18. http://dx.doi.org/10.47253/jtrss.v4i1.584.
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Catchment-to-intake-point (CTIP) economic valuation of water resources is an important aspect of sustainable forest management. With a total of about 94,851 ha of forest catchment area, the state of Johor has among the largest inland water bodies and, thus, water resources in Malaysia. However, the economic valuation of CTIP water resources is rather undeveloped in this country. This paper introduces a hybrid method of CTIP economic valuation of water resources from forest catchment areas based on state-wide Cobb-Douglas translog production function and residual methods, by taking the state of Johor, Malaysia, as a case study. Data on Gross Domestic Product (GDP), labour (L), capital (K), water (W), energy (E), and raw materials (M) were collected for the state of Johor from various secondary sources. Using a pro-rata price in 2014, the total value of CTIP water resources for an assumed lease period of 60 years at 4% per annum is RM 70,272,825.14. This is equivalent to the use-value of water of RM 1,171,213.75 per annum which is an additional source of income to the state government.
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Terletska, Viktoria. "Approaches and methods of evaluation of the innovation company." Management and Entrepreneurship in Ukraine: the stages of formation and problems of development 2021, no. 1 (June 1, 2021): 177–82. http://dx.doi.org/10.23939/smeu2021.01.177.
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The article the main traditional approaches to business valuation, namely: profitable, costly and comparative have been explored and analyzed. The main methods within each of the traditional approaches have been investigated. The methods of estimating the value of business by income approach are the method of capitalization of net income, the method of capitalization of dividends, the method of capitalization of excess income and the method of discounting cash flow. The methods of estimating the value of business by the cost approach are: the method of net book value, the method of adjusted book value, the method of estimating the net market value of tangible assets, the replacement cost method, the replacement cost method and the liquidation value method. The methods of estimating the value of business by a comparative approach are the method of industry ratios, the method of comparing sales and the method of multipliers. In addition, it is found that in modern conditions, traditional approaches to assessing the value of the business “in its pure form” are not always used by venture investors, and the most popular methods are contractual, multipliers, discounted cash flow, venture and real options. Synthetic models play an important role today. In world practice, many different approaches are used to assess the value of companies, their assets, business in general. However, the issue of evaluation is still insufficiently addressed. When conducting valuation work in enterprises, many of the existing approaches are either not used at all, or are used very rarely, resulting in practice does not always achieve a comprehensive, complete and objective assessment of the amount of capital. A characteristic feature in determining the value of the business within the application of each of the commonly used methods is the need to take into account various aspects of financial activities, which leads to different estimates of the value of the business, which requires coordination of the results. This situation involves the selection of key cost parameters to obtain the final value of the business. Given the above, there is a need and feasibility to reconcile the results of business valuation methods, which will help to obtain a reasonable value by combining the advantages of each of the traditional methods. Determining the value of the company is one of the most important tasks in the field of corporate governance, which makes it possible to assess the level of competitiveness and success of the company in the market. The process of determining the value is carried out with a specific purpose: calculating the sale price, property insurance, obtaining a loan, etc., which determines the choice of valuation method. Business valuation is the determination of the value of a business as a property complex that can bring profit to the owner. When conducting an appraisal examination, the value of all the company’s assets is determined: real estate, machinery and equipment, inventories, financial investments, intangible assets. In addition, the efficiency of the company, its past, present and future revenues, development prospects and competitive environment in this market are assessed separately, and then the evaluated company is compared with similar companies. On the basis of such a comprehensive analysis, the business is actually assessed as a property complex that can be profitable.
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YURCHENKO, O., and О. SVYRYDA. "The Role of Pricing in Taxation of Business Enterprises." Scientific Bulletin of the National Academy of Statistics, Accounting and Audit, no. 3 (November 1, 2019): 40–53. http://dx.doi.org/10.31767/nasoa.3.2019.04.
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The problem of pricing is elaborated with respect to setting the tax base for calculating tax obligations (taxes and duties) assessed and paid by business enterprises by the general tax system. The role of the regular market price when calculating the tax base for national taxes (profit tax, value added tax, excise tax and tax on incomes of physical persons) is highlighted.
It is shown that valuation of assets (property rights) is the process of estimating their cost on the date of valuation by the established procedure. The valuation can be performed by entities charged with valuation (legal entities, physical persons – entrepreneurs, state power bodies or local power bodies). Subject to valuation are assets (movable and immovable) and property rights (e. g. intellectual property rights, rights for use of nature resources etc.). The cases of obligatory expert valuation of assets are clarified in the course of the study; the valuation phases are substantiated in conformity to the national standards on valuation of assets and property rights.
The notion of transfer pricing, occurring in time of transactions involving residents and non-residents that are subject to control by tax bodies in order to combat minimization of income tax, is defined. Economic transactions with a non-resident counterparty are identified as controlled ones by a payer of profit tax, when their result has no effect for a taxation object. An economic transaction will be identified as a controlled one, when it complies with two criteria set by the Tax Code of Ukraine: cost criterion (the volume of annual income and the volume of transactions with a counterparty) and status criterion (what is non-resident, whether or not it is related with a Ukrainian tax payer, where it is registered, what is its organizational and legal form, whether or not it pays profit tax and by what rate). The controlled transactions are subject to audit for the compliance of their prices with “arm’s length” principles, with the possibility of adjusting a transaction price for purposes of profit taxation in case of noncompliance.
International and national law establishes five main methods for price determination in the controlled transactions. The choice of method and texted party depends on the essence of transaction and the character of its parties’ interactions. The article gives a description of methods for calculating transfer prices used by tax bodies for auditing the correctness of estimated profit tax in the controlled transactions. The authors believe that the top one is the method of comparative non-controlled price, because it can be used when performing transactions on sales of goods with mass-scale demand, for which it is easier to find the data on analogous transactions of other companies on the commodity market and compare the conditions of such economic transactions.
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Kucharska-Stasiak, Ewa, and Sabina Źróbek. "An Attempt To Exemplify The Economic Principles In Real Property Valuation." Real Estate Management and Valuation 23, no. 3 (September 1, 2015): 5–13. http://dx.doi.org/10.1515/remav-2015-0020.
Full textAbstract:
Abstract The economic theory argues that the value of assets, including the value of real property, is influenced by many factors which determine the behavior of operators engaged in market transactions. The knowledge of basic principles and assumptions which underpin the development of value is essential to understanding the methods and procedures of valuation. The thesis, upon which the authors of this article based their theoretical and practical considerations, is formulated as follows: “The knowledge of economic principles of valuation improves the accuracy of valuation and allows for more appropriate interpretation of its results”. Therefore, these factors should be taken into account by appraisers estimating the value of property. Over a dozen so-called key principles of valuation have been formulated in literature. Among them are the principles of anticipation, change, substitution, supply and demand, competition, balance, highest and best use, conformity, and externalities. It is assumed that the most important principle in the valuation of property is the principle of anticipation. Some of the principles are relevant to all the traditional approaches to determining value, while others apply only to selected approaches e.g., the principle of opportunity cost, which is mainly used in valuations using the income approach. The thesis is supported by research results and an analysis of practical examples.