Application On The Market Approach Of Listed Automobile Enterprises' Valuation

Our automobile industry plays an important role in the revolution of transportation.Because of the development of joint venture,merge of companies and structural upgrades of energy,valuation of our country's automobile enterprises shows its importance.In the previous research and practice,income method was usually used in automobile enterprises' valuation.However,it would influence the accuracy and objectivity with the difficulty to verify when using only one method in appraisal.So,due to the case of our market's better development,market approach,with the advantages of simplicity,less limits,convenience of comprehension,should become an important way of automobile enterprises' valuation.Taking listed companies of automobile industry of China into account,the key point of this paper is the identification of comparable companies and comparable ratios of market approach in enterprise valuation,To choose the ratio objectively and scientifically,in this paper,financial indices are selected by the character of automobile industry;using principal component analysis(PCA),we can get the comparable firms and ratios.Finally,the value of target company will be calculated by market approach.The whole process of valuation will show in this paper.In conclusion,it is time to value listed automobile companies with market approach.The use of market approach,which can be considered as a mutually testing way of income method,can improve the efficiency and simplify the procedures of appraisal.Simultaneously,to ensure objectivity and applicability of the appraisal results,it is suitable to mark all the companies with PCA.