Share Valuation, Valuation of shares, Stock Valuation, Shareholder Value

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Share Valuation, Valuation of shares, Stock Valuation, Shareholder Value

Are you going to buy or sell a shares in a company? We offer you a template for share valuation which you can download and use for free. With our template for stock valuation you kan do a valuation of shares and calculate a shareholder value. A shareholder value depends on the companys future ability to generate profit and cashflow, it is though difficult to estimate and forecast future sale and its impact on expenses and payments, especially for new companys. It is a little bit easier to appreciate a shareholder value for a company with some history, then you can look at historical income statements for some years backwards in time and calculate the proportion of expenses in relation to the revenue. These proportions can be used to estimate expenses based on a forecast of revenue in the future.

1. Share valuation, Valuation of shares, Stock valuation, Shareholder value

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Share valuations
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With this template in Excel you can do a share valuation of a business by the method of discounting future income. An valuation of shares according to this method demands estimations of future revenue and expenses. Each years income is discounted by a discount rate, which means that income is worth less if it arises late in the future then if it arises today. Income in the future gives less contribution to the share value compared to income today.

The workbook includes five (5) worksheets and cells with green color is cells for input, cells with white color is output cells and have formulas. In the worksheet named Valuation is a share value computed based upon discounted income. The first ten future years of income is discounted by the discount rate. The Residiual value is the stock value that comes from the infinite years after the first ten years and this value is added to the stock value.

The principle for valuation of a shares according to this method with discounted income assumes the company to survive forever, "Going concern". A share value computed according to this model can be lower than the net worth (Market value of assets minus market value of liabilities).

The person or company how are about to buy or sell shares in a company or a business have to decide on there own which valuation method that are most fair and correct to appreciate one shareholder value. Valuation of stock with models give you hints about a companys value and can not replace your human skills.

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