| Method | Formula / Basis | Pros | Cons |
| 1. Discounted Cash Flow (DCF) | DCF = CF₁/(1+r)¹ + CF₂/(1+r)² + ... + CFₙ/(1+r)ⁿ | • Based on expected future cash flows • Widely used by analysts | • Requires detailed financial projections • Sensitive to discount rate changes |
| 2. Comparable Company Analysis (CCA) | Valuation Multiple = Company Metric / Peer Metric | • Uses actual market data • Easier and faster than DCF | • May not reflect unique company traits • Heavily depends on comparables |
| 3. Precedent Transactions Analysis | Valuation Multiple = Transaction Price / Relevant Metric | • Based on actual historical deals • Reflects real-world investor behavior | • Limited data availability • Subject to market timing |
| 4. Asset-Based Valuation | Asset Value = Fair Market Value of Assets – Liabilities | • Focus on tangible value • Simple for asset-heavy companies | • Ignores intangibles and goodwill • Not ideal for dynamic businesses |
| 5. Earnings Multiples | P/E = Price per Share / Earnings per Share EV/EBITDA = Enterprise Value / EBITDA | • Reflects profitability and sentiment • Enables peer comparisons | • Ignores nonrecurring factors • Multiples vary by industry |
| 6. Liquidation Valuation | Liquidation Value = FMV of Assets – Liabilities | • Useful in distress situations • Reflects conservative value | • Not for healthy companies • Asset values often discounted |
| 7. Weighted Average Cost of Capital (WACC) | WACC = (E/V) × Re + (D/V) × Rd × (1 – Tc) | • Key input for DCF • Measures actual cost of funding | • Sensitive to assumptions • Hard to estimate accurately |