I have found all the answers, but I have no idea how to compare my findings.
Here are what I need to compare.
1) Rules of thumb:
2) Adjusted book value:
3) Discounted cash flow:
All three of those have answers that I have already found but I am suppose to compare them and I don't know how to go about it. Any help is appreciated.
QUESTION:
Compare your findings for each valuation method, and discuss any differences or similarities between the calculated values. What method do you think gives the most accurate picture of the worth of Arcadia in 2005? Explain your answer.
Well I guess I should provide the answers lol
1. Rules of thumb: 1136
2. Adjusted book value: 7900
3. 655,000,000
To compare your findings for each valuation method and determine which one provides the most accurate picture of the worth of Arcadia in 2005, you can assess the differences and similarities between the calculated values obtained through each method. Let's break down the comparison process for each valuation method:
1) Rules of thumb:
This method typically involves using general guidelines or industry averages to estimate the value of a company. To compare the findings obtained through this method, you can consider how the calculated value aligns with the typical range or multiples used in the industry for similar companies. Determine if the calculated value is within the expected range or if it significantly deviates from it.
2) Adjusted book value:
Adjusted book value takes into account the company's financial statements, but also considers the market value of its assets and liabilities. To compare this method, you can assess how the adjusted book value differs from the company's recorded book value. Look for any notable adjustments made to the assets or liabilities that may affect the value. Consider how accurately the adjusted book value reflects the economic reality of the company.
3) Discounted cash flow:
Discounted cash flow (DCF) is a financial valuation method that estimates the present value of a company's projected future cash flows. To compare DCF findings, you can assess the discount rate used, which reflects the time value of money and risk associated with the company's expected cash flows. Evaluate the accuracy of the projected cash flows and consider any assumptions made. Look for consistency and reasonability in the estimated future cash flows.
Once you have compared the findings for each valuation method, consider the similarities and differences between the calculated values. Look for any patterns or trends. For example, if all methods pointed to a similar value range, it may indicate a more accurate estimate. On the other hand, if one method differs significantly from the others, it may suggest potential issues or limitations of that particular method.
In determining which method gives the most accurate picture of Arcadia's worth in 2005, you need to evaluate the specific context, limitations, and reliability of each method. Consider the industry and market conditions during that period. Additionally, think about any unique aspects of Arcadia's business or financials that may affect the accuracy of the valuation methods.
In conclusion, comparing the findings for each valuation method and analyzing their differences and similarities will provide insights into which method gives the most accurate picture of Arcadia's worth in 2005. Remember to assess the context, limitations, and reliability of each method before making a final determination.