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Business valuation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Business valuation

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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  • May 25, 2021 at 4:19 pm #621754
    vavneetb
    Participant
    • Topics: 175
    • Replies: 123
    • ☆☆☆

    In some questions in valuation, using net assist value based method, the actual formula is TA-TL. In valuation, they have taken preference share capital in total liability, why is that?

    Also, ‘while preference share are classified as a prior charge capital, they pay dividend, not interest and preference share are not debt’ what does this mean?

    May 26, 2021 at 9:00 am #621788
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54753
    • ☆☆☆☆☆

    Preference shares receive a fixed dividend, and’ prior charge capital’ means that if the company closes down then they get paid back before ordinary shareholders get anything.

    Asset valuations are valuing how much should be paid to the ordinary shareholders if the company is being taken over.

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