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What is Asset Valuation?

What is Asset Valuation?

Asset valuation is a method of determining the present or the fair market value of assets by using book values, discounted cash flow analysis, comparable, or option pricing models. Asset valuation includes marketable securities investments such as bonds. Asset valuation also includes valuation of tangible/fixed assets like buildings and equipment, or intangible assets such as patents, logos and trademarks.

 

Asset Valuation for Tangible/Fixed assets

In finance, Asset valuation plays a major role which often involves of both subjective and objective measurements. Asset valuation of a company’s fixed assets, which is also known as; property plant and equipment or capital assets, are straightforward to value based on the assets’ book value and replacement cost.

 

Asset Valuation for Intangible assets

Nevertheless, there are no financial statements that can tell the investors the exact value of a company’s brand or intellectual property. In an acquisition, companies can overvalue their goodwill because the Asset valuation of intangibles is subjective and can be hard to valuate, therefore, it is difficult to get an accurate measurement.

 

https://www.investopedia.com/terms/a/assetvaluation.asp#:~:text=Asset%20valuation%20is%20the%20process,option%20pricing%20models%20or%20comparables.

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