Valuation Model Excel Templates

What is Valuation?

Valuation is the process of calculating the current worth of an asset or liability. Examples of assets are stocks, options, companies, or intangible assets. Concerning liabilities, they can be bonds issued by a company.

Common terms used when discussing the value of an asset or liability are market value, fair value, and intrinsic value.

Put simply, the value to be derived is the present value of all the future benefits (or cashflow) of the given asset or liability. This can calculated in various ways, with the use of financial and valuation tools, to determine the magnitude and risk of such future benefits. Take the example of an analyst determining the value of a company. He will consider the company’s management, the composition of its capital structure, the prospect of future earnings and market value of assets to come to terms with its value.

Some sample ways to value assets and liabilities are the following:

Comparative valuation: Comparing the asset to other similar assets and evaluating its cashflow potential.
Future cash flows: the value of the asset can be based on future cash flows (that is, if they produce cash flows). For a stock, for example, it would stem from its dividends or share price appreciation. This can be done in multiperiod models (DCF models) or single period models (Gordon model).
Option pricing Excel models: for particular types of financial assets. Black-Scholes-Option pricing model is one way of doing it.

All in all, Valuation in finance is key for many reasons. It is needed in investment analysis, capital budgeting and acquisitions transactions, financial reporting, or taxable events.

If you’d like some Valuation Excel Model Templates to facilitate your valuation, you will find the above valuation techniques and many more on the Eloquens catalogue. Also, if you have any questions or would like to discuss matters about a given tool, you can contact our authors whom will happily get back to you.

For more in depth information about Valuation, feel free to have a look through these links: