Intrinsic value

The intrinsic value ( English asset value ) is in the business administration a value which predominantly in the business valuation is taken as a basis.

General

The compound substance value is made up of the “substance” as a component of a thing or a right and its “value”. The intrinsic value generally belongs to the field of appraisal . It is an inventory value that is based on the real value of an object being valued. In contrast, the earnings value that is an alternative to the intrinsic value - and used for comparison purposes - is a flow variable . Movable items (such as works of art , jewelry ; in this case the higher subjective collector's values or collector's values ), aggregates (such as a doctor's office ), land and rights equivalent to land or entire companies come into question as objects to be assessed for the intrinsic value . Especially with the latter, the intrinsic value is of particular importance.

history

The first work on company valuation was published in 1946 by the Swiss business economist Karl Käfer . Well-known German business economists also took up the topic. In 1956 , Hans Münstermann propagated the principle of the valuation unit, Günter Sieben received his doctorate in 1961 with a study entitled “The substance value. A contribution to teaching the evaluation of the company ”. In 1963, Sieben wrote another basic work on intrinsic value. According to this, the majority of authors define the substance value not only as an objective but also as a static present value. But as early as 1958 Karl Hax pointed out that the future success value was the only “true value of the company”. Today, the intrinsic value is considered to be the “reproduction value” based on the replacement costs ( replacement value) of the assets. Reproduction value is the hypothetical effort that would have to be made to restore the valued company.

detection

According to Manfred Jürgen Matschke , the starting point for determining the intrinsic value is the substance, i.e. the company's assets ( both essential and non-operational). It is made up of tangible and intangible real goods and nominal goods . The intrinsic value of a company results from the sum of the individual values ​​of all operational assets at fair value on the valuation date minus debts and provisions : ${\displaystyle S}$ ${\displaystyle V}$ ${\displaystyle S}$

${\displaystyle S=V-S}$.

By deducting the debt remaining net asset value ( English net asset value ). Under the concept of goodwill ( English goodwill ) the difference between the intrinsic value is generally and the yield value of a company understood: ${\displaystyle F}$ ${\displaystyle S}$ ${\displaystyle E}$

${\displaystyle F=E-S}$.

If the earnings value is greater than the intrinsic value, there is positive goodwill :

${\displaystyle E>S}$,

otherwise it is a negative goodwill ( English badwill ):

${\displaystyle E<S}$.

For Adolf Moxter , the intrinsic value is the sum of the replacement costs and debts of an entire company. In this definition, the liquidation value is the opposite. While the going concern value is assumed for the intrinsic value , the liquidation value is based on the assumption that the company will be broken up.

criticism

The intrinsic value has no independent significance when determining the company value. The company value is generally determined as future success value. The discounted cash flow method and the discounted cash flow method have emerged as common methods in company valuation practice.

Tax net asset value

The Valuation Act (BewG) defines the net asset value as the "sum of the mean values of the business assets belonging to the business assets and other active approaches minus the debts belonging to the business assets and other deductions of the company" ( § 11 para. 2 BewG). Under tax law, it must not be undercut and is to be used above all when inheriting companies. It is only to be set as the minimum value if the mean value is determined using the simplified income approach or an appraisal value . Applications for asset value method in addition to the evaluation of a company to be liquidated all cases where regular high hidden reserves or closing date hidden losses are present. This primarily affects real estate and investment companies . The intrinsic value provides a better statement about the actual value of the company than the book value shown in the balance sheet .

Other areas of expertise

In other fields of intrinsic value, for example, circumscribes the inner value ( English intrinsic value ) in the fundamental analysis , the market value , metal value of goods or market value .

See also

• Tobin's Q
• Value investing

Individual evidence

1. ^ Karl Käfer, On the assessment of the company as a whole , in: Accounting in companies and state administration, Festgabe für Otto Juzi, 1946, p. 74
2. ↑ Hans Münstermann, Evaluation of Entire Companies , in: Handwortbuch der Betriebswirtschaft, Volume 1, 1956, Sp. 1061 f.
3. ↑ Günter Sieben, The substance of the enterprise , 1963, p. 49
4. ↑ Günter Sieben, The Substance Value of the Company , 1963, p. 79
5. ^ Karl Hax, The long-term financial dispositions , in: Handwortbuch der Wirtschaftswwissenschaften, Volume 1, 1958, p. 453
6. ^ Adolf Moxter, Principles of Correct Company Valuation , 1983, p. 51
7. ^ Adolf Moxter , Principles of Proper Company Valuation , 1983, p. 41
8. ↑ Manfred Jürgen Matschke / Gerrit Brösel, company assessment , 2013, p. 315
9. ↑ Gerrit Brösel / Rainer Kasperzak (eds.), International Accounting, Examination and Analysis , 2004, p. 251
10. ↑ Gerrit Brösel / Rainer Kasperzak (eds.), International Accounting, Examination and Analysis , 2004, p. 251
11. ^ Adolf Moxter, Principles of Proper Company Valuation , 1983, p. 41
12. ↑ Institut der Wirtschaftsprüfer : "Principles for conducting company evaluations (IDW S 1)", (as of April 2, 2008), margin no. 6th
13. ↑ IDW, S1 (2008), margin no. 7th
14. ↑ RB 11.3 para. 1 ErbStR 2011