What is a 'Valuation'?

A valuation is defined as the process of determining the current worth of an asset or company. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

| Term of the Day Valuation Valuation is the analytical process of determining the current (or projected) worth of an asset or a company. There are many techniques used for doing a valuation. An analyst placing a value on a company looks at the business's management, the composition of its capital structure, the prospect of future earnings, and the market value of its assets, among other metrics. Fundamental analysis is often employed in valuation, although several other methods may be employed such as the capital asset pricing model (CAPM) or the dividend discount model (DDM). Read More » Related to "Valuation" How to Choose the Best Stock Valuation Method There are many valuation methods available to investors, each with unique characteristics. Here, we'll explore the most common valuation methods – and when to use them. Read More » How To Use Ratios to Determine if a Stock Is Overvalued or Undervalued Learn about some of the most common valuation methods for stocks. Does it make sense to invest based on your financial goals and risk tolerance instead? Read More » Valuing a Company Using the Residual Income Method Learn the underlying basics behind the residual income method and how it can be used to place an absolute value on a firm. Read More » Related Definitions Earnings Per Share – EPS Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serves as an indicator of a company's profitability. Read More » Price-to-Earnings Ratio – P/E Ratio The price-to-earnings ratio (P/E ratio) is defined as a ratio for valuing a company that measures its current share price relative to its per-share earnings. Read More » Absolute Value Absolute value is a business valuation method that uses discounted cash flow analysis to determine a company's financial worth Read More » Relative Valuation Model A relative valuation model is a business valuation method that compares a firm's value to that of its competitors to determine the firm's financial worth. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy