There are many different methods<\/strong> for valuing companies. A company valuation can include an analysis of the company management, the capital structure, the future earnings prospects or the market value of the assets<\/a>. The tools used for valuation can vary depending on the company and industry. Common approaches to business valuation include auditing financial statements, discounting cash flow models<\/a> and also comparisons of similar companies. <\/p>\n\n Valuing a company is a very complex process but not an exact science. There are many methods for valuing a company. Some of them are presented below: <\/p>\n\n The use of market capitalization is one of the simplest methods. Market capitalization is calculated by multiplying the share price by the number of shares<\/a> in circulation. For example, the market capitalization of Bell Ltd is CHF 1.76 billion. The number of shares in millions is 6.28 and the share price is around CHF 280 (as at 21.02.2022). Market capitalization is therefore the valuation of a company on the stock exchange<\/a>. <\/p>\n\n The company with the highest current market capitalization (as at 21.02.2022) is Apple, followed by Saudi Aramco and Microsoft.<\/p>\n\n The largest Swiss company is Nestl\u00e9 with a market value of USD 333.2 billion, followed by Roche and Novartis.<\/p>\n\n Source: www.pwc.de<\/p>\n\n Quelle: www.statista.com<\/p>\n\n So-called multiples can be used to value listed companies. For example, the prices paid on the stock exchange<\/a> (trading multiples) can be used here. Multiples can be, for example, sales<\/a>, EBITDA, EBIT, net profit<\/a>, price\/earnings ratio<\/a> or the price\/book ratio<\/a>. <\/p>\n\n In the company valuation method using the turnover<\/a> factor (temporal turnover method), a turnover stream generated over a certain period of time is given a multiplier that depends on the industry and the economic environment. For example, a technology company can be valued at three times turnover, while a service company can be valued at 0.5 times turnover. <\/p>\n\n Enterprise value = turnover x turnover multiplier<\/em><\/p>\n\n Instead of the sales multiple, the profit multiple can also be used to get a more accurate picture of a company’s true value, as a company’s profits are a more reliable indicator of its financial success than sales. Different profit ratios can be used for profit, as the following examples of sales multiples show: <\/p>\n\n Enterprise value = EBITDA x EBITDA multiplier<\/em> where:<\/em> The discounted cash flow<\/a> method is used to determine the fair value of a company based on future cash flows. The series of cash flows that an investor expects over the duration T of the investment is added to the terminal value. The free cash flow<\/a> serves as the base value. The free cash flow is the cash flow that could be distributed without affecting the current business plans. The cash flows are discounted using a tax-adjusted weighted average cost of capital(WACC<\/a>). See also Discounted cash flow (DCF) for the formula and specific examples. <\/p>\n\n Economic Value Added (EVA) is a measure of a company’s financial performance. EVA can also be referred to as economic profit<\/a>, as it attempts to capture the actual economic profit of a company. EVA is the difference between the rate<\/a> of return (RoR) and the cost of capital of a company. If a company’s EVA is negative, this means that the company is not creating any value with the funds invested in the company. <\/p>\n\n EVA = NOPAT – (invested capital x WACC)<\/em><\/p>\n\n where:<\/em> The aim of EVA is to quantify the cost of investing capital in a business and then assess whether it generates enough cash to be considered a good investment. A positive EVA shows that a project is generating returns<\/a> in excess of the minimum required rate of return. <\/p>\n\n In an EVA-based company valuation, the present value of the future EVA is determined first. If the capital invested at the beginning of the period under review and the terminal value are added to the present value of the future EVA, the result is the enterprise value. In theory, the DCF and EVA methods should lead to the same result. <\/p>\n\n This is the value of a company’s equity as shown in the balance sheet<\/a>. The book value is calculated by deducting a company’s total liabilities (current and non-current liabilities) from its total assets. <\/p>\n\nMethods of company valuation<\/h2>\n\n
Market capitalization<\/h3>\n\n
List of the 10 most valuable companies by market capitalization<\/h2>\n\n
![\"Illustration](\"https:\/\/lirp.cdn-website.com\/6ea53b9f\/dms3rep\/multi\/opt\/Unt.Bew.PWC-1920w.png\" "\\"\\"")
<\/figure>\n\nThe 15 largest Swiss companies by market value on April 16, 2021<\/h2>\n\n
![\"Figure](\"https:\/\/lirp.cdn-website.com\/6ea53b9f\/dms3rep\/multi\/opt\/Gr%C3%B6ssteCHU-1920w.png\" "\\"\\"")
<\/figure>\n\nMarket value methods – the use of multipliers<\/h2>\n\n
Discounted cash flow method<\/h3>\n\n
EVA method<\/h3>\n\n
Book value<\/h3>\n\n
Liquidation value<\/h3>\n\n