Learn how to calculate amortisation and sinking fund during valuation of a firm. Calculation of Amortisation: Amortisation is the gradual and systematic writing off of an asset or an account over a period. The amount on which amortisation is provided is referred to as “amortizable amount”. Depreciation accounting is form of amortisation applied to depreciable assets. Depletion is a form [...]
If the shareholder, who is offered right shares, does not want to purchase further shares, he can renounce or sell his rights within the specified period. As, generally, the rights shares are offered to the existing shareholders at a price lower than the market price of shares, the right to purchase these shares is valuable. The value of the rights [...]
Some of the commonly used methods for calculating the valuation of a firm are as follows: 1. Capitalised Earnings 2. Assets Approach 3. Market Value Approach 4. Earnings per Share. Valuation of Firms: Method # 1. Capitalised Earnings: The capitalised earnings method is based on the philosophy that the price which a buyer would like to pay for the property [...]