Branson Valuation

1933 words 8 pages
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Business Valuation Report

The Branson Trucking Company As of December 31, 2007 for Dave James

by

Hien Nguyen
Forensic Accounting
Tuesday 5:30-8:30 PM

November 29, 2011

Dear Dave James,

I have been asked to determine the fair market value of Branson Trucking Company as of December 31, 2007 for the purpose of determine your share in the business.

The definition of fair value market value is the price at which the property would change hands between a willing buyer and willing seller, neither being under compulsion to buy or to sell and both having reasonable knowledge of all relevant facts.

Based on the information
…show more content…
This method ignores the value of revenue, earnings, and cash flow, and usually considered as an indicator of value only when the earnings methods indicate value lower than Net Worth. Net Assets – Liability = Net Worth | | | | 9,924,000 – 5,100,000 = 4,824,000 |

Liquidation Value Liquidation value estimates the value that might expected if assets of the company were subjected to an orderly liquidation, usually over several months. This situation usually only arises when the company is no longer viable as a going concern and the owners want to close up, sell all assets, and pay off liabilities. In this situation, there are usually costs associated with liquidation process, and often there are tax effects. The following table shows the value which could be expected if the company were subjected to an orderly liquidation.

| Book Value | Percent Realized | Liquidation Value | Gain (Loss) Liquidation | Current Assets: | Cash | 218,000 | 100% | 218,000 | 0 | A/R | 610,000 | 90% | 549,000 | (61,000) | Inventory | 165,000 | 50% | 82,500 | (82,500) | Prepaid Expenses | 141,000 | 75% | 105,750 | (35,250) | Fixed Assets: | Land | 650,000 | 100% | 650,000 | 0 | Building & Fixture | 2,920,000 | 100% | 2,920,000 | 0 | Rolling Stock | 4,230,000 | 100% | 4,230,000 | 0 | Investments: | Bond sinking Fund | 340,000 | 90% | 306,000 |

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