Asset based valuations

In this lesson

1. 0:00 Asset-based valuations and terminology
2. 0:43 Understanding minimum value and limitations
3. 1:03 Net replacement cost approach
4. 1:21 Calculating net asset value formula
5. 2:08 Worked example: minimum share price
6. 3:04 Identifying asset basis triggers
7. 3:19 Adjusting for realisable values
8. 4:26 Converting company value to per-share price

About this lesson

You'll discover when this valuation method is most relevant (particularly for struggling businesses or liquidations), explore the difference between book value and net realisable value, and work through practical examples showing how to calculate net asset value per share. This technique is essential for Strategic Business Leader (SBL) and other ACCA papers where you need to justify minimum valuations or understand business worth from a balance sheet perspective. The asset-based or net asset basis (NAV) assumes a company's value equals its net assets, making it particularly useful when future profitability is uncertain or the business is difficult to sell. You'll learn to adjust asset values to their realisable amounts and handle common complications like irrecoverable receivables. Through worked examples, you'll see how to move from total company valuation to per-share price—a critical skill for exam questions involving share valuations and minimum acceptable offers. This approach gives you a floor value for any business, complementing other valuation methods in your toolkit.

Duration: 5m