Pls tell me the the method of valuation of shares of a private company
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Valuation of shares
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1. Put the assets at their fair value.
2. Deduct from that all outside liabilities.
3. Divide the resultant figure by no. of outstanding shares, you will get the value of the share of a privage company.
4. Take the average of last three years profits and capitalise it by the rate of return of that industry.
5. Divide this figure by number of shares, you will get the value of the share.
6. Add the value of share as obtained above at 3 and five and divide by two. This can be called the fair value of a private company's share.
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