The seven basic principles of assessment and diagnosis of enterprise financial
Basic principles for evaluation of the company are:
1. The principle of anticipation
– This implies that firm value is derived from expected future benefits to be derived from possession or use of property, having regard to the state markets: international, national, regional, at a time and continue their evolution.
2. The principle change
– Supply and demand forces are in a continuous dynamic and constantly create an economic environment, leading to fluctuations in price and value. Under this principle, cause and effect relationship is changing in its forces influence real property value.
3. Competition principle
– Prices are sustained and the values are set by continuous competition and interaction between buyers and other participants in the housing market.
– A rational buyer will not pay more for a property than the cost of acquisition of other properties with similar characteristics.
5. The principle contribution (marginal productivity)
– The value of any factor of production or composition of the property depends on the extent to which his presence adds something to the overall value of the property.
6.Principle best use
– To assess the market, the property would be assessed if the best use.
7.Principle opportunity cost
– It expresses the appreciation of enterprise value is determined by the buyer. The opportunity cost is measured by removing the earnings just the best option in an effort to maximize the effort.
• financial diagnosis. One of the most interesting and comprehensive approaches aimed at addressing the financial diagnosis for evaluation, this component having diagnostic key role in the evaluation process because the company played a major role in the report namely: the role of synthesizing the lessons learned from other pieces of diagnostic The role of coherence in the relationship-diagnostic assessment methods. Financial Diagnosis has three major objectives: to ensure understanding of business performance achieved in the last 3-5 years assessed, and highlighting risks to the business. In this sense, thinking of future perspectives on the analysis of performance trends that allegedly occurred during the diagnosis period, to allow adjustment of historical financial statements: the development of asset-based approach, implicitly fixes the elements of assets and liabilities , to prepare the approach based on income, by estimating the Company’s ability to generate cash income for capital providers, provide similar comparisons to establish enterprise risk parameters, cost and value comparison approach fundamental issues in the assessment firm’s capital cost estimates