Valuation definition.


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What is valuation ?

Valuation refers to the process of determining the current or potential worth or value of an asset, investment, or business. Valuation is typically performed in order to make informed investment decisions, assess the financial health of a company, or determine the fair price for an asset in a transaction.

Valuation methods can vary depending on the type of asset being valued and the purpose of the valuation. Common methods used in financial valuation include discounted cash flow analysis, comparable company analysis, and precedent transactions analysis. Real estate valuation often uses the comparable sales method or the income approach.

Valuation can be used in a variety of contexts, such as mergers and acquisitions, initial public offerings, private equity investments, and asset management. It is an important aspect of financial analysis and is used to determine the intrinsic value of an asset or company.