Financial Terms / valuation

# What is Valuation?

Valuation is a quantitative process that helps determine the fair value of an asset or company by considering the worth of the security and company using multiples.

## Formula

``VAL = Total Outstanding Shares * Price per Share``

## How do I calculate the valuation?

```It is important to understand the process of valuing a business, as it can be used for many reasons. There are a few different methods for calculating the worth of a business, such as market cap, earnings multipliers, or book value. To calculate market cap, `multiply the total number of outstanding shares of a company by its current market price per share.` Earnings multipliers take into account the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) to create an estimate of the company’s value. Lastly, book value takes into consideration the company’s assets and liabilities to estimate the business’s worth.

Using programs such as Sourcetable can help to make the process of calculating the worth of a business much easier. It’s important to keep in mind that the results of these calculations are only estimates, and actual values may vary.```

## What activities are involved in Valuation?

`Valuation involve posters, signs, television commercials, radio spots, and other forms of media.`

## What is the purpose of Valuation?

`The purpose of Valuation is to provide customers with answers to their most common questions about a product or service.`

## What formulas are involved in Valuation?

`Valuation may involve formulas such as `Net Present Value`, `Internal Rate of Return`, and `Discounted Cash Flow`.`

## Key Points

How do I calculate valuation?
`VAL = Total Outstanding Shares * Price per Share`