Definitions and terms in the Valuation of business

For the purpose of consistency, clarity and better communication, Business Valuer must use the definitions and terms as specified in this regulation. In the case of using the definition Valuer Business and other terms that are not specified in the regulations, the definitions and other terms must be clearly disclosed in the letter of assignment and Business Valuation Reports. 

Definitions and terms referred to in the business in the assessment include: 

  • Net Cash Flow is the amount of cash available after available needs cash for operating activities Cash flow that is available for the capital (debt and equity), which has been free from the obligation to maintain the current operation and to anticipate the growth of the company. 

    Gross Cash Flow is net profit after tax, plus non-cash transactions, such as depreciation and amortization. 

    The assumption is considered to be the case, including facts, conditions, or circumstances that may affect the assessment of the object, or the approach to the Valuation , based on the agreement, will need to verified by a Valuer Business as part of the Valuation process. 

    The assumption is a special assumption that: needs assessment on the facts of a different material with the facts in a given period of assessment, can not be met by prospective buyers because of market conditions. 

    new reproduction Estimates cost is the cost of re-creating a kind of goods at the time now. 

    new replacement cost is Estimates of the value of goods with a price based on the purchase of goods of equal or near equal to the goods that are, at the time is now 
    Interest Business is business interest which includes the inclusion of which in the company, securities, financial assets and other intangible assets. 

    Basic Valuation is an explanation or by definition, the type of values that are examined based on certain criteria. 

    Discount on the lack of control is a certain amount or percentage of the reduced value of equity in the company as a reflection of a lack of some or all control. 

    Discount Marketability Liquidity is a certain percentage or amount of the reduced value of equity as a reflection of a lack of liquidity as a result of limited equity to be exchanged quickly into cash. 

    Minority discount is the discount on the absence or lack of ability to control a result of minority ownership. 

    factor Capitalization is the ratio of all types that are used to convert income into value. 
    Going concern is: A condition that reflect the business that are operating or in construction; One premise in the Valuation , which assume a Valuer Business entities will continue to proceed in a sustainable operation. 

    Goodwill is not tangible assets that resulted because of the name, reputation, location, patronage, both products and other factors that can generate economic benefits in the future. or the Investment Holding Company is a company that primarily conduct business activities and the inclusion of revenue derived primarily inclusion of these assets. 

    Operating Holding Company is a company that derives revenue primarily from the inclusion and other operational activities. 

    Capitalization is: converting net cash flow or other net income, both actual and estimated that, during a certain period to be the equivalent value of assets, on a certain date, or a recognition as capital expenditures. 

    Control level control is a majority-owned stock ownership of a majority. 
    Business Valuation Reports are written reports made by the Business Valuer to provide information about the process and results of the assessment. 

    assessment method is a way or a series of specific ways to make the assessment. 
    Multi-period income of discounting method is a method that discounted a series of economic income to be generated by an unbalanced or reverse the assessment of the objects that will be received by investors, generally in the form of cash flow with a discount rate that reflects the cost of capital used to generate economic it. 

    capitalization of income method is a method that build on a number of income, is considered to represent the future ability of a company or business interest that are divided by a capitalization rate or multiplied by a factor capitalization value indication from the company or business interest. 

    Working capital is the difference between net current assets of more responsibilities smoothly. 

    Invested Capital is the number of long-term debt and equity in an entity. 
    Value is the estimated price desired by the seller and a buyer of goods or services and in assessing the amount of business is the most economic benefit will be worthy of a company or Business Interest became the object of assessment, on the date of assessment. 

    net asset value is total assets less total liabilities. 

    Book Value Adjusted book value is generated after the adjustment of the value of one or more assets or liabilities. 

    Book value is the cost of acquiring assets that are capitalized depreciation reduced accumulation, depletion or amortization, as reflected in the bookkeeping. the difference between total assets (net of depreciation, depletion, and amortization) with total liabilities of an entity as shown in the balance. 
    Value premise is the assumption that a condition related to the transaction that can be used against objects such as the assessment going concern or liquidation. 
    o Fair Market Value assessment in the business have the same understanding of the market value, is the approximate amount of cash or its equivalent that can be obtained from a transaction to buy the company or sell shares or interest in the company of willing buyer willing seller on the basis of the same like the love and both have the capacity to make a transaction, to act without forced and each with its own facts and relevant information. 
    The assessment is a way to estimate the value of using one or more methods of assessment. 
    Asset Based Approach is a way in estimation value of an object is determined based on the assessment of financial assessment historical objects that have been audited, where all assets and liabilities to be adjusted fair market value or market value. Adjustments must return the value in accordance with the premise that the value used in the assessment of whether the going concern or liquidation. 
    Market Based Approach is a way to estimate the value of a business, ownership, or the effect, by comparing the object with the assessment of business, ownership, or a comparable effect, which has been sold in the market or that the price has already been selling. 
    Income Based Approach is a way to estimate the value of a business, ownership, or the effects, how to convert the economic benefits of the economic or anticipated income will be generated by the object assessment future. 
    Control is the power or ability to direct and manage the business management or policy. 
    Valuation o Business is the activity or process to produce an estimate or opinion on the value of a business, entity or interest in the entity, including the assessment of the assets are not substantial. 

    Control Premium is a certain percentage or amount of the added value of the stock ownership or control over, which reflects an entity. 
    Date is the date signature Reports Valuatin Business. 
    Valuation Date is the date when the value, the assessment or calculation of economic benefits will be revealed. 
    Other Experts are people who have skills and qualifications in a certain area outside the scope of assessment and does not work in the Business Services Valuer . 
    Level Diskonto is a level of reimbursement to convert the nominal value in the future to present value. 
    Level Capitalization is the number of dealer (usually in the form of a percentage) that is used to convert income into value. 
    Rate of return is the amount of profit (loss) and / or changes in the value of the realized or expected from an investment, expressed in value percent of the investment.