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Accounting All-in-One For Dummies by Jill Gilbert Welytok, Tage C. Tracy, John A. Tracy, Vijay S. Sampath, Maire Loughran, Frimette Kass-shraibman, Mark P. Holtzman, Lita Epstein, Ken Boyd

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Chapter 1

Presenting Financial Condition and Business Valuation

In This Chapter

arrow Valuing assets in balance sheets

arrow Using the balance sheet to estimate the value of a business

arrow Considering methods to value an entire business

The balance sheet, also called the statement of financial condition, gives a snapshot of a business's financial health at a point in time. It presents the assets of a business on the one hand and the liabilities and equity sources of the business on the other hand, reflecting the balance sheet equation:

  • Assets = Liabilities + Equity

This chapter considers how to value (estimate the monetary worth of) the assets and liabilities in the balance sheet. Traditionally, a business values assets at historical cost. In this chapter, you find out how to use other methods to value assets and how to compute a valuation for an entire business.

This chapter also explores the various uses for valuations and touches on the field of performing valuations as an occupation. You finish the chapter with a discussion of business valuations based on earnings and cash flow.

Clarifying the Values of Assets in Balance Sheets

The evidence is pretty strong that readers of financial reports ...

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