Valuation techniques
In this lesson, you'll learn the three core valuation techniques used in financial reporting: the market approach, cost approach, and income approach.
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In this lesson
- 0:00 Valuation techniques overview
- 0:10 Fair value hierarchy and principles
- 0:34 Three main valuation approaches
- 1:00 Income approach and discounting methods
About this lesson
You'll discover how to select the right technique based on your circumstances and available data, and understand why maximising observable inputs while minimising unobservable ones leads to more reliable valuations. This is essential knowledge for SBR and AFM, where you'll need to apply these methods to real-world scenarios and justify your valuation choices in case studies. The market approach uses prices from comparable market transactions to value identical or similar assets. The cost approach estimates the replacement cost of an asset, while the income approach converts future cash flows into a single present value using discounting. Understanding when and how to apply each technique—and when to combine them—will help you tackle valuation questions with confidence and demonstrate the professional judgment examiners expect.
Duration: 1m
Transcript
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