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0:00
Hello, my name is Rudy Aernoudt.
I'm a professor at the
University of Ghent
which is a university
in Belgium.
I'm going to give
a lecture today,
financial management and the
topic is about valuation.
0:14
Why do you need to know
the value of a company?
Well, you have a lot of
people who are interested.
First of all, if you want
to take over a company,
you have to know
what is the price.
It's both important for
the selling and for
the buying party.
If you want to achieve
venture capital,
I need to find a
venture capitalist
to get into your company,
you have to get a
value of the company.
If you are a financial
manager or a CFO,
the objective of
financial management
is to increase the
value of the company
but even in the case
of liquidation,
the creator needs to know
the value of the
company and finally,
as a bank, as a company is
often the basis of collateral,
you have to know what is
the value of my company.
0:55
When we speak about the
value of a company,
you make a distinction
between companies who
has what we call
an organic growth,
meaning a gradual growth,
often asset based,
where in the first years
you might make some losses,
but you don't have a cash drain,
so it's a normal organic
growing of the company.
1:14
As you can see, we compare
a company with a cow
because the value of
a cow you can say,
what is the number
of kilograms of
meat times price of the
meat or you can say,
how many litres of milk
does the cow give.
1:29
Coming back to enterprises,
the first method,
let's say the meat,
is what we call the
Adjusted Net Assets calculation.
What you do, you look at
the assets of the company,
fixed assets, floating assets.
You look what is the real value,
not the accounting value,
but you're going to
compare with reality.
For instance, you see
an amount of stocks,
you're going to look
to the inventory,
what is the real
value of the stocks.
You're going to do
some corrections,
based on those corrections,
then you will say, what
is the real value of
my assets and you're going to
deduct the callable debts.
This is the first approach,
what we call adjusted assets,
which is in fact based
on the balance sheet.
The second method, going back to
