Skip to content

CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Kaveri Ltd (transferee) is to merge with Narmada Ltd (transferor). Valuations by weights: Narmada's value per share is Rs 60 on asset approach, Rs 90 on earnings approach and Rs 120 on market approach, weighted 1:2:3 respectively. What is the weighted value per share of Narmada?

The weighted value per share is Rs 100. Multiply each method's value by its weight, 60, 180 and 360, add to get 600, and divide by total weight 6. Rs 600 results only if the division by weights is omitted.

  1. ARs 100Correct
  2. BRs 90
  3. CRs 600
  4. DRs 105

Explanation

Weighted value = (60x1 + 90x2 + 120x3)/(1+2+3) = (60+180+360)/6 = 600/6 = Rs 100. Rs 90 is the simple-average-looking middle value ignoring weights, and Rs 600 forgets to divide by the sum of weights.

Did you get it right without looking?

One question tells you little. A timed set on Valuation of Business and Assets for Corporate Restructuring shows your real accuracy, how long you take and where you lose marks.

Practise Valuation of Business and Assets for Corporate RestructuringFree diagnostic mock

More Valuation of Business and Assets for Corporate Restructuring questions