Determining the value of business using discounted cash flow method on example of Arttechstroy LLC

STATE EDUCATIONAL ESTABLISHMENT

"SCHOOL OF BUSINESS OF THE BELARUSIAN STATE UNIVERSITY"

DEPARTMENT OF BUSINESS ADMINISTRATION

Сoursework

DETERMINING THE VALUE OF BUSINESS USING DISCOUNTED CASH FLOW METHOD ON EXAMPLE OF ARTTECHSTROY LLC

                                                                 Student:

                                                                           A.K. Shpektorova

                                                                 4th year student, group 813

                                                                 BA

                                                                 Supervisor:

                                                                 Y.A. Myshkovets

                                                       Ph.D. in Economics,

                                                                 Associate Professor

Minsk, 2021

CONTENT

INTRODUCTION        4

CHAPTER 1 DEFINITION AND DESCRIPTION OF DISCOUNTED CASH FLOW METHOD OF BUSINESS VALUATION. ITS ADVANTAGES AND LIMITATIONS        6

1.1        Definition and description of discounted cash flow method analysis of business valuation        6

1.2        Brief economic review of ArtTechStroy LLC        10

CHAPTER 2 DETERMINING THE VALUE OF ARTTECHSTROY LLC USING DISCOUNTED CASH FLOW METHOD        16

2.1        Determining the model and predicting of the company future free cash flow        16

2.2        Determining the discount rate level        30

2.3        Calculation of the value of the company as a sum of its value within forecasted period and terminal value        32

CONCLUSION        34

BIBLIOGRAPHY        36

APPENDIX A        38

APPENDIX B        40

ABSTRACT

MARKET VALUE, BUSINESS VALUATION, COST APPROACH, MARKET APPROACH, INCOME APPROACH, DISCOUNTED CASH FLOW METHOD

The object of the course paper is ArtTechStroy LLC.

The subject of the work – determination of the value of valuation of ArtTechStroy LLC using discounted cash flow method.

The purpose is to determine the value of ArtTechStroy LLC.

The objective is to examine the theoretical aspects of discounted cash flow method, market and income approaches to business valuation.

The methodology of the work includes scientific generalization, proportional dependency method, DCF method.

Concerning elements of scientific novelty, a DCF method for conducting market valuation of ArtTechStroy LLC is presented and justified.

The research and developments: based on the study of the theoretical issues of market valuation for a commercial organization, the specifics of its implementation have been determined, as well as the approaches and methods used, an analysis of the internal information necessary for the valuation of ArtTechStroy LLC has been carried out, the valuation of the firm using cost, market and income approaches has been conducted, and the resulting market value of the organization has been calculated.

The theoretical foundation of this research will be educational materials developed by such Belarusian author as Kovalev M.M. as well as Kasyanenko T.G., Chainikov, V.V., Grigoriev V.V., and others, regulations and standards in the field of business valuation, local regulations of ArtTechStroy LLC, financial statements of the company, as well as periodicals and Internet sources.

The scope of possible application includes justifying practical implementation of the results of the study in business valuation, which effectively contribute to company performance and increasing its value.

The author acknowledges that materials used in the paper correctly and objectively present the case, and all cited sources are referenced to their original authors.

_______________________

(student's signature)

INTRODUCTION

In the production and economic practice of economic entities there are many cases when it becomes necessary to assess the market value of the property of enterprises. No operation within the property purchase and sale process, insurance, settlement of property disputes, taxation can be held without it. Therefore, there is a need for specialists in valuation activities. Valuation activity is the main part of the process of economic reform.

Business valuation is becoming more relevant every year, because in market conditions it is impossible to effectively manage any company without a real business valuation. Enterprise valuation is a universal indicator of the effectiveness of any management strategies. When buying and selling property, when evaluating intellectual property, when revaluing fixed assets, when implementing depreciation

Determining the market value of an enterprise contributes to its preparation for struggling within the local or global market. The process of assessing the business of enterprises serves as the basis for developing its strategy. It identifies alternative approaches and determines which one provides the company with maximum efficiency and, therefore, a higher market price.