Enterprise Valuation Based On Real Options

The significance of the new energy vehicle industry in China’s economy has grown exponentially as the nation’s economic growth rate continues to improve.Consequently,the nation has implemented a succession of regulations to foster its progress,and has attained satisfactory outcomes.In spite of its progress,the new energy vehicle sector is still in its infancy,with certain deficiencies,and there are some shortcomings.At the same time,due to the decline in subsidies for new energy vehicles and the entry of internationally renowned electric vehicle and internet vehicle brands into the market,BYD,which is at the forefront of the new energy vehicle industry,has brought development uncertainty and competitive pressure.With the deepening of industrial development,the new energy vehicle industry will have bright prospects.In the new situation of the capital market,reasonable valuation of enterprises is an important way to help corporate investors and decision-makers make reasonable financing decisions and increase the wealth of corporate shareholders.Adopting suitable value evaluation methods for enterprises is an important condition for helping China’s new energy vehicle enterprises to better develop,and also plays a prominent role in the practical and theoretical development of enterprise value evaluation.This article first sorts out the current development status of domestic and international real options from enterprise value evaluation theory and practical application of evaluation methods perspectives.By understanding the current development status of evaluation methods,the article summarizes the latest research achievements in the industry and believes the research on real options in the field of new energy vehicles has major deficiencies.Qualitative analysis of enterprise value is divided into two distinct categories: current and potential.Current value analysis examines the factors that currently influence enterprise value,while potential value analysis investigates the sources of BYD’s future potential value,the drawbacks of traditional evaluation methods,and the benefits of the real option method employed.An evaluation model,combining the traditional cash flow discount method and the real option model,is constructed to estimate the value of BYD,compare it to the market value of BYD during the evaluation base period,and ultimately verify the practicality of the real option method in new energy vehicles.Through analysis,this paper first draws the conclusion that external environmental factors in the daily operation of enterprises will affect the development of enterprises,and BYD may affect its short-term operating profit due to large external expenditure in the short term.However,with the support of national policies and technological development,BYD will usher in a brighter development prospect.Secondly,compared with traditional methods to evaluate the value of new energy vehicles,the discounted cash flow method to estimate the existing value of enterprises,combined with the real option model to estimate the potential value of enterprises can more comprehensively reflect the value of enterprises,and put forward the shortcomings in the study of enterprise value and outlook.