Income Approach To Assess The Enterprise Value Of Case Studies

As a kind of organizational form the enterprise has been striving to realize its target since it came into being. As is well known, the target of company's financial management is to maximize its value as possible as it can. In theory, it is uniform and has a reasonable proportion as well between its internal value and its external value for a company. Internal value is the determinant factor. In an effective market, a company's internal value is the main influencing factor about its market value. As to a listed company, it is expected in future that stock price is the real reflection of the company. That is, the level of the stock price is indicating the value of company.But in fact, it is dissimilarity between the internal value and the market price of the company in most situations. Investors pay no attention to the real achievements of enterprise, but depend on what is so-called" inside news", or market rumor about the value of company, or anticipation of market, and so on. The behavior of investor is more of a kind of speculation behavior; this certainly will cause the violent fluctuation of the stock price, beat the confidence of the long-term investor, and influence the long-term development of the company at last. That is the reason why someone considers the investment stock as buying the lottery ticket.And now how to evaluate the value of company attracts more and more attention. As the value of company is the basis of how to invest the stock market, how to determine the issue price, and so on. This paper lays particular emphasis on the applications of income law in assessing the free cash flows of the value company. After explaining the concept of the value of company, influencing factors of company's development, the paper analyzes the reasonability of income law while evaluating enterprise's value through several kinds of methods, and combining Yizheng chemical fiber company to explain the practical applications of income law. The paper strives to confirm the effectiveness of income law in assessing the value of company, hope to offer a way of thinking and feasible methods for the stock investor and listed company administrator while facing the problem of how to make a reasonable investment decision.