Company Value: Definition, Types, Factors, Measurement and Capital Structure
Company Value: Definition, Types, Factors, Measurement and Capital Structure – What are Company Values? On this occasion About the knowledge.co.id will discuss what is meant by Corporate Value and other elements about it. Let's look at the discussion together in the article below to better understand it.
Company Value: Definition, Types, Factors, Measurement and Capital Structure
Firm value is the perception of investors on the level of success of the company which is often associated with stock prices. High stock prices make the company value high and increase market confidence only on the company's current performance but also on the company's prospects in the future come. Maximizing the value of the company is very important for the company, because maximizing the value of the company means maximizing the main goal of the company or parent company.
Definition of Company Value According to Experts
Gitman (2006: 352)
According to Gitman, Company Value is the actual value per share that will be received if the company's assets are sold at the share price.
Sartono (2010:487)
According to Sartono, Corporate Value is the selling value of a company as an operating business. The existence of excess sales value over liquidation value is the value of the management organization that runs the company.
Brigham and Erdhadt (2005:518)
According to Brigham and Erdhadt, Firm Value is the present value (present value) of future free cash flows at a discount rate according to the weighted average cost of capital. Free cash flow is cash flow available to investors (creditors and owners) after taking into account all expenses for the company's operations and expenses for investment as well net current assets.
Harmono (2009:233)
According to Harmono, Corporate Value is the company's performance as reflected by the share price formed by the supply and demand of the capital market which reflects the public's assessment of performance company.
Noerirawan (2012)
According to Noerirawan, Corporate Value is a condition that has been achieved by a company as an illustration of public trust towards the company after going through a process of activity for several years, namely since the company was founded until the time This.
Types of Corporate Values
Based on the calculation method used, there are 5 (five) types of company values, including:
Nominal Value
Nominal value is the value stated formally in the company's articles of association, explicitly stated in the company's balance sheet and also written clearly in the collective share certificate.
Market value
The market value, also known as the exchange rate, is the price that occurs as a result of the bidding process in the stock market. Market value can only be determined if the company's shares are sold on the stock market.
Intrinsic Value
Intrinsic value is the most abstract concept, because it refers to an estimate of the real value of a company. The value of the company in the concept of intrinsic value is not just the price of a set of assets, but also the value of the company as a business entity that has the ability to generate profits in the future day.
Book value
Book value is the value of the company which is calculated on the basis of accounting concepts. In simple terms, book value is calculated by dividing the difference between total assets and total debt by the number of outstanding shares.
Liquidation Value
Liquidation value is the sale value of all company assets after deducting all liabilities that must be met. Liquidation value can be calculated in the same way as book value, which is based on the performance balance prepared when a company is about to be liquidated.
Firm Value Factors
There are several factors within the company including the following.
Profit Growth Factor
Profit growth is a positive influence on the value of high growth and the more valuable the profit growth that results in greater profit potential.
Thus the company's profits can manage its business efficiently because it is able to get higher profitability the higher and can increase trust in the community and get investors pushing more big.
Dividend Payout Ratio Factor
The Dividend Payout Ratio factor is a value that has a positive influence on growth the higher the sale value the company increases by having a profit for the holder share.
The Dividend Payout Ratio factor can also provide a signal to investors for the company to maintain and respond positively with higher growth so that it has a growth character dividend.
Factor Required Rate of Return
The Required Rate of Return factor is a value factor that has a profit level that is considered feasible for investors or a level with more priority profits.
The Required Rate of Return factor can be given a value in selling the shares and will push the stock price down even further so that this ability will be even lower.
Corporate Value Measurement
With stock prices that use the ratio as a valuation tool. Rating ratios that can provide information to the public then measurements can be compared from the value of the company.
The following forms of measurement are as follows:
Price Earning Ratio (PER)
is the amount of measurement in the form of money that is willing to be issued from investors to pay for each profit report, so that it can measure how much profit the shareholders get.
Price to Book Value (PBV)
is the number of measurements that will show that the stock price can be traded through overvalued with the stock book, so that the greater the ratio that has been invested in the company.
Tobin's Q
is the number of measurements that can be counted so that we can compare market values in the form of a ratio of shares to the company.
Corporate Values Approach
According to Suharli (2006) in Uniariny (2012), there are several approaches that can be taken for company value, including:
- The profit approach includes the profit rate ratio method or the Price Earning Ratio.
- The cash flow approach includes the discounted cash flow method.
- The dividend approach includes the dividend growth method.
- The asset approach includes asset valuation methods.
- Approach to stock prices.
- Economic Value Added (EVA) Approach.
Company Value Capital Structure
The capital structure that can maximize the value of the company, or stock price, is the best capital structure (Husnan). According to Sawir (2005:10), capital structure is permanent funding consisting of long-term debt, preferred stock, and shareholder capital.
The book value of shareholder's capital consists of ordinary shares, paid-up capital or surplus, retained capital and accumulation. The capital structure is part of the financial structure. According to Weston and Brigham (2003), capital structure is a combination or mix of all items that enter the right side of the company's capital source balance sheet.
Understanding the capital structure is distinguished from the financial structure, where the capital structure is a permanent expenditure that reflects between term debt long term with own capital, while the financial structure reflects the balance between all debt (both short term and long term) with capital Alone.
A relatively high level of debt will incur fixed costs in the form of interest expense, thereby increasing the company's business risk. Second, corporate tax where the main reason for using debt is because interest costs can reduce tax calculations (deductibles) thereby reducing the actual tax costs. Third, financial flexibility or the ability to increase capital. Steady capital is needed for the stability of the company's operations.
Thus the review from About the knowledge.co.id about The value of the company, hopefully can add to your insight and knowledge. Thank you for visiting and don't forget to read other articles.
List of contents
Recommendation:
- Computer Hardware: How it Works, Types, Examples and… Computer Hardware: How it Works, Types, Examples and Functions - In today's computerized era, we are definitely familiar with computers and their devices. However, some may not know...
- The Collapse of the Kediri Kingdom: History and Legacy The Fall of the Kediri Kingdom: History and Legacy - The Kediri Kingdom or the Kadiri Kingdom or the Panjalu Kingdom was a kingdom that existed in East Java between 1042-1222. The kingdom is in the city…
- Environmental Speech: Definition, Purpose, Characteristics and… Environmental Speech: Definition, Purpose, Characteristics and Examples - How is the text of environmental speech structured? what's good and right?, On this occasion, Seputarknowledge.co.id will discuss it and of course things Which…
- √ Definition of Company Performance According to Experts (Discuss… Understanding Company Performance According to Experts (Full Discussion) - Of course, we can see that each company can definitely review the performance of a company. Each company, of course, always reviews the performance of…
- Examples of Scientific Work: Functions and Rules of Language Examples of Scientific Papers: Functions and Rules of Language - What are examples of good and correct forms of writing scientific papers? Previously, Seputar the knowledge.co.id has discussed Scientific Work: Definition, Characteristics, Benefits,…
- √ Definition of Working Capital, Concepts, Types, Benefits, Management… Definition of Working Capital, Concept, Types, Benefits, Management and Use - In this discussion we will explain about Working Capital. Working capital is related to one's field of business to be able to run...
- Scope of Psychology: Definition, Kinds, Tasks and… Scope of Psychology: Definition, Kinds, Tasks and Methodology of Psychological Research - What is the scope psychology? On this occasion, Around the Knowledge.co.id will discuss what psychology is and what it is covered it. Let us…
- 8 Best and Guaranteed Stock Trading Application Recommendations… 8 Recommendations for the Best and Guaranteed Safe Stock Trading Application Lately, many people are interested in starting an online stock trading business via smartphone devices. This is of course driven by the presence of the application…
- Definition of Chemical Elements and Their Grouping (Discussion… Definition of Chemical Elements and Their Grouping (Full Discussion) - Here will be discussed about understanding of chemical elements, grouping or division of chemical elements based on their nature and based on his discovery. Let's look at the discussion below...
- √ Definition of Perfect Competition Market, Characteristics and… Definition of Perfect Competition Market, Characteristics and Strengths - On this occasion Around Knowledge will discuss about Perfect Competition Market. Which in this discussion explains the meaning of perfect competition market,...
- The Constitution Is: Definition, Function, Purpose, Type, Space… Constitution Is: Definition, Function, Purpose, Type, Scope and History - What is meant by a constitution? On this occasion, Seputarknowledge.co.id will discuss what is the constitution and what surrounds it.…
- √ Definition of Capital Market, History, Purpose, Functions, Types,… Definition of the Capital Market, History, Purpose, Function, Types, Benefits, Role, Structure and Examples - In this discussion we will explain about the capital market. Which includes the understanding of the capital market, the history of the capital market,…
- √ The Pros and Cons of the Capital Market (Discuss Completely) The Pros and Cons of the Capital Market (Full Discussion) – In this discussion, we will start discussing the capital market. Where previously it has been explained about the meaning and also its function. But right now…
- Example of a Non-Fiction Book Review: Purpose and Benefits of a Review Example of a Non-Fiction Book Review: Purpose and Benefits of a Review - What is meant by a non-fiction book review?
- Long Jump: Definition, History, Technique, Style and… Long Jump: Definition, History, Technique, Style and Rules - What is called the Long Jump ?On this occasion, Seputarknowledge.co.id will discuss what the Long Jump is and other things about it. Let…
- √ Definition of Performance Management, Objectives, Benefits, Principles &… Definition of Performance Management, Purpose, Benefits, Principles & Process - In this discussion we will explain about Performance Management. Which includes the understanding, objectives, benefits, basic principles and processes of performance management with…
- Marketing Management Tasks: Important Stages and Factors… Marketing Management Tasks: Key Management Stages and Factors - What are the marketing management tasks? This time around the knowledge.co.id will discuss what are the tasks of marketing management and other factors...
- √ Definition of Money Market, Objectives, Functions, Characteristics, Benefits,… Definition of Money Market, Objectives, Functions, Characteristics, Benefits, Actors, Instruments & Types of Transactions - In this discussion we will explain about Money Market. Which includes the definition of money market, purpose, function,...
- Pencak Silat: Definition, History, Characteristics, Purpose, Techniques,… Pencak Silat: Definition, History, Characteristics, Purpose, Techniques, and Levels - Does anyone know what it is Pencak Silat? On this occasion, Seputarknowledge.co.id will discuss Pencak Silat and other things other…
- Types of Shares and Their Explanations (Full Discussion) Types of Shares and Their Complete Explanation - Previously discussed the meaning stocks and bonds, and on this occasion we will discuss the types of shares Alone. Shares (equity) are securities…
- √ Definition of Self-Esteem, Aspects, Sources, Components, Factors and… Understanding Self-Esteem, Aspects, Sources, Components, Factors and How to Grow It - In this discussion we will explain about self-esteem. Which includes the notion of self-esteem, the importance of self-esteem, aspects and...
- Definition of a Business Plan: According to Experts, Types,… Definition of a Business Plan: According to Experts, Types, Benefits, Framework and Conclusion - What is meant by a Business Plan? On this occasion, Seputarknowledge.co.id will discuss what is meant by the Definition of Business...
- Motivational short stories: definition, writing tips and examples Motivational Short Stories: Definition, Writing Tips and Examples - What is a Motivational Short Story?, On On this occasion, Seputarknowledge.co.id will discuss whether it is the Short Story of Friendship and other matters about it. Let's see…
- 10 Benefits of Reading Books Every Day for Life aroundknowledge.co.id - The benefits of reading books are many. But let's face it. It can be hard to motivate yourself to read a 382 page book when you can watch movies, listen to…
- Monopsony Market: Definition, Characteristics, Formed Factors,… Monopsony Market: Definition, Characteristics, Formed Factors, Advantages and Disadvantages - What is a monopsony market? On this occasion, Seputarknowledge.co.id will discuss it and of course about other things as well covered it. Let…
- √ Definition of Trust, Basic Elements, Benefits and Things… Definition of Trust, Basic Elements, Benefits and Importance - In this discussion we will explain about Trust or Trust. Which includes the meaning, basic elements, benefits and important things related to…
- Definition of Microeconomics and its Assumptions and Goals… Definition of Microeconomics and its Assumptions and Objectives (Complete) – In economics, this term is known Microeconomics or microeconomics is a branch of economics learn…
- √ Definition of Market Segmentation, Purpose, Terms, Benefits,… Definition of Market Segmentation, Purpose, Terms, Benefits, Basis, Strategy and Levels - In this discussion we will explain about market segmentation. Which includes the definition, objectives, conditions, benefits, basis, strategy and levels...
- How to Create a Strong Marketing Funnel aroundknowledge.co.id - Whether you know it or not, you have a marketing channel. Many companies don't know what a marketing channel is or how to measure it. In fact, over 68% of businesses are not aware of it. But…
- Example of historical story text in Indonesia Examples of historical story texts in Indonesia – What are examples of historical stories like? This time around the knowledge.co.id will discuss examples of historical stories and their structure. Let's take a look at the discussion in the article on…