Different enterprises set themlves differet strategic goals and objectives
for example, someone at the moment is important to improve the investment attractiveness, the other is interested in increasing working capital and reducing the cost of production. You can also optimize the tax base, create market stability. One of the tools to solve these problems is to assess the property of the enterprise.
When deciding whether to revalue or initially assess the property of an enterprise, the owner must take into account that depreciation charges will form the investment opportunities of the company. However, given the constant shortage of cash or other means of payment, some owners use depreciation to replenish working capital, which partly solves the problem of maintaining liquidity in the required order.
If the company has an established sales market, and the profit from production activity is received regularly, and the solvency problem is not so acute, then the enterprise is most likely interested in updating its technological or production base in order to increase competitiveness and reduce costs , and, as a consequence, the amount of depreciation. And therefore, if the owner expects to assess the property of the enterprise to reduce the value of the property, then this will deprive the company of a reliable source of funds.
It should also be noted that the results of the company’s property valuation affect the company ‘s long-term market stability. For example, with an increase in the volume of ownership, the structure of the company’s capital is improving – this positively affects the investment attractiveness. However, at the same time, depreciation charges, the amount of which can significantly increase during revaluation, are conditional-constant costs. The increase in these costs (and, correspondingly, their share in the cost price) leads to higher risks of loss of profit and stability with a decrease in cash flow and a decline in sales. Especially attentively to the valuation of the property should be attributed to capital-intensive enterprises with a high proportion of chronic costs.
Moreover, overstatement of depreciation charges causes problems with sales as well – in order to remain breakeven, the company will need to increase sales or product costs. This is not always possible and advisable because of the prevailing market conditions on the market.
Either way, enterprise asset valuation is the most effective asset management tool for the enterprise, and helps in solving such problems as optimization of asset management policy, ensuring the sustainability of current activities, increasing investment attractiveness. This, in the long run, with proper interpretation leads to an increase in the company’s competitiveness.
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Methodology of enterprise property valuation.
The valuation of the property of the enterprise is carried out by methods, united in three groups:
Approach of the comparative analysis of sales.
The company “Active Business Consulting” uses in its work all three approaches to determine the value of the property of the enterprise. The reports are fully compliant with the requirements of legislation and regulations, standards and recommendations for valuation activities.
The company “Active Business Consulting” is ready to perform the valuation of the property of the enterprise professionally and qualitatively – you will get the opportunities that every manager dreams about.
The objectives of the valuation of the property complex:
The market value of a property complex can be used as an indicator of the effectiveness of its management and, as a consequence, increasing the effectiveness of its management.
Transaction of purchase and sale. Despite the fact that the buyer and the seller have the right to independently determine the price (unless otherwise provided by law), an independent valuation will establish a real price benchmark (market value) for the sale object existing on the date of the transaction. In this case, an evaluation of the property complex will mean a separate business in any form of ownership. With this kind of evaluation, it is necessary to evaluate the shares of joint-stock companies or shares in limited liability companies already.
The presence of an independent appraiser’s report will make it possible to certify that the transaction of purchase and sale was conducted in good faith before the persons whose interests may affect this transaction (shareholders of the enterprise, the higher organization, state bodies), each participant of the transaction acted in the interests of its party and was aware of the real market conditions , the real market value of the object of purchase and sale and the cost of similar facilities.