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Value of company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Value of company

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by AvatarJohn Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • May 21, 2022 at 8:20 am #656115
    AvatarRon123
    Participant
    • Topics: 72
    • Replies: 93
    • ☆☆

    Hi, if a question requires us to find the value of a company, or the value attributable to a company, automatically it means the “equity value” of a company, which is the total present values of the firm minus the value of any debt borrowings?

    Thank you.

    May 22, 2022 at 7:55 am #656158
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    No. The value of the company is the value of equity plus debt.

    May 22, 2022 at 8:27 am #656169
    AvatarRon123
    Participant
    • Topics: 72
    • Replies: 93
    • ☆☆

    Oh I see. Since the equity and debt (liability) are on the credit side in the balance sheet, the corresponding debit side will be the asset. This means that the value of the company (equity + debt) is also the value of the assets combined?

    Thank you.

    May 22, 2022 at 4:29 pm #656193
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    Correct.

    May 24, 2022 at 2:45 pm #656341
    AvatarRon123
    Participant
    • Topics: 72
    • Replies: 93
    • ☆☆

    I see. Thank you.

    May 24, 2022 at 4:37 pm #656358
    AvatarJohn Moffat
    Keymaster
    • Topics: 57
    • Replies: 54845
    • ☆☆☆☆☆

    You are welcome.

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘Value of company’ is closed to new replies.

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