Valuation & Biz-Modeling

Adjusted Book Value Method

A method within the asset approach whereby all assets and liabilities (including off-balance sheet, intangible, and contingent) are adjusted to their fair market values.

Asset-Based Approach

A general way of determining a value indication of a business, like business ownership interest, or security using one or more methods based on the value of the assets net of liabilities.

Average Revenue Per Unit (ARPU)

A measure of the revenue generated per user or unit. This measure allows for the analysis of a company’s revenue generation and growth at the per unit level, which can identify which products are high or low revenue-generators.

Binomial Tree

A graphical representation of possible intrinsic values that an option may take at different nodes or time periods. The value of the option depends on the underlying stock or bond, and the value of the option at any node depends on the probability that the price of the underlying asset will either decrease or increase at any given node.

Blockage Discount

An amount or percentage deducted from the current market price of a publicly traded stock to reflect the decrease in the per share value of a block of stock that is of a size that could not be sold in a reasonable period of time given normal trading volume.

Business Enterprise

A commercial, industrial, service, or investment entity (or a combination thereof) pursuing an economic activity.

Business Risk

The degree of uncertainty of realizing expected future returns of the business resulting from factors other than financial leverage.

Business Valuation

The act or process of determining the value of a business enterprise or ownership interest therein.

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