Entity method
The entity method is a form of the discounted cash flow method for company valuation . It is the opposite of the equity method . In finance, the entity method is also known as the gross method .
With the gross method, the present value of all incoming cash flows is first determined, assuming full self-financing of the valuation object, after taxes (free cash flow). The market value of the borrowed capital is then subtracted from the market value of the total capital in order to obtain the market value of the equity capital.
The entity method includes:
- Adjusted present value ( A djusted P resent V alue)
- WACC ( W eighted A verage C east of C apital)
- TCF approach ( T otal C ash F low)
Individual evidence
- ^ Thomas Wala, Franz Haslehner, Stefan Szauer: Company valuation in the context of M&A transactions based on case studies. (No longer available online.) In: Working Paper Series University of Vienna. 2006, archived from the original on September 24, 2015 ; accessed on August 11, 2015 . Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
