Enterprise Evaluation Based On Income Method And Its Sensitivity Analysis

The enterprise evaluation is the product of market economy. With the establishment of market economic system and the transformation of share-holding in the state-owned enterprise, enterprise value assessment emerged and developed. The earliest enterprise value assessment was in order to assess the evaluation of professional purposes in our country. But with the stable growth of the current economy, the enterprise evaluation becomes diversified, and the methods of evaluation are also constantly developing and innovating. In order to meet the requirement of society, the staff prefers income method to cost method. In fact, income method has become the most frequently used method in the enterprise value assessment. For all the purpose of assessment, when evaluating the enterprises of continuing operations, enterprise value is discounted the future revenue stream in essence, so income method is the most fit to the situation. Because it is the forecast of future earnings, so when we use income method, the uncertainty of assessment parameters will exert a great influence on the accuracy of the evaluation result. So assessment personnel need to test the assessment results. To test the influence of the parameters on the evaluation results, we need to analyze the parameter sensitivity.Firstly the article makes the brief introduction to the background, research significance and literature content. And it shows the situation, the influence and the basis for the enterprise assessment. Then, in the practice of assessment, this part introduces the situation of the company, the industry and the macro-economic in our country. This part shows the situation of the company in detail. Focal point of the article is about the income method of assessment including the selection of methods in the assessment and the specific process of the income method of assessment. In the enterprise evaluation, this part centers on the discount rate and the forecasting of future cash flow to show the serviceability of the income method in the theory and practice. Finally, the article tests the outcome and uses the sensitivity analysis to explain the reliability of the outcome. The article can make significance in the practice.