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The article focuses on the need to understand business valuation and estimate market value of a company. Topics discussed include role of tangible and intangible assets to determine value of the business, focus of the business to raise capital from stakeholders like debt holders and equity holders, and funds provided by equity holders to the business without the business incurring debt.

The article demonstrates how using weighted average cost of capital in the capitalization formula can overstate the value of equity, at least as leverage is decreasing. It says that the capitalization formula with weighted average cost of capital (WACC) is universally used in business valuation because it is quick and convenient.

In this article the author discusses the advantages of using the discounted cash flow business valuation method. He notes that the number one advantage of this method is its simplicity, adding that in business the simple approaches are often overlooked. He asserts that this method works best for small to mid-sized nonpublic companies. He discusses how by using a combination of prior cash flow statements, tax returns, and business and economic assumptions you can predict future cash flows and yield solid valuations. He also provides a four-step process that walks the reader through the process and teaches them to make their own valuations.

Discusses the theory of Residual Income Valuation Model (RIM). How RIM compares to the traditional method for corporate valuation, the discounted cash flow model (DCF); Comment of Dan Thornton, financial accounting professor at Queen's School of Business, about RIM and the valuation approach called Economic Value Added (EVA); View of forensic accountant, Al Rosen, that the RIM model has a flaw; The role of Jerry Feltham, a Sauder School of Business professor, in originating the RIM or Feltham-Ohlson model.

Suggests that business owners should put their companies through a regular valuation process. Sectors with high demand for acquisition; Views of David Malizia, managing director of Florida Capital Partners, on comparing business valuations; Benefits of using a discounted cash flow model to value the company.

The article discusses real options analysis for valuations of corporate finances. The article comments that the discounted-cash-flow (DCF) approach and the net-present-value (NPV) method undervalue assets and potential projects. The benefits of using real options analysis when considering small, potentially high growth companies and any internal company project is discussed. Resources for real options analysis are provided.