Approach to valuing a business or project.
Valuation methods can generally be classified into one of three groups. The first is an asset based valuation, which simply derives value directly from the balance sheet. The second is earnings based valuation, which calculates value by multiplying some form of earnings from the profit and loss statement by a given multiple.
Our preferred approach is to value on the basis of future cash flows using a Discounted Cashflow process, which we feel ? despite its imperfections ? is an intrinsically better method than the rest.