Equity Evaluating In Equity Investment Based On Residual Income Approach

The concept of equity investment is relative to the investment side. The equity investment is one of the economic behaviors that investing enterprise funds or assets to obtain certain proportion of the shares of enterprise who to be invested. With the continuous development of capital market, equity investment has become an important means of investment. To private equity investment funds, for example, in 2009 China's private equity investment funds accounted for one-third of the amount of investment of the whole of Asia, and the proportion of this year continued to expand. Equity investment is going throught the rapid development, while evaluation methods of equity value research cannot match that development. In this paper, we start the reach from the meaning of enterprise value, through carries on the analysis to the equity investment activities, combined with the advantages and disadvantages and applicable conditions of the enterprise value evaluation of three main methods, emphasize the intrinsic value of the enterprise residual income model, and apply it to a venture capital company of M company's equity investment case, assessment of the M company transfer to a company's equity value, in case to validate the rationality and find problems that may exist in the practical operation.