Calculate Value in Use under IAS 36
The core underlying principle of IAS 36 Impairment of Assets is that an asset’s carrying value in the financial statements of the company should not exceed the highest amount the business can recover through its use or sale. The standard applies to all assets for which there are no impairment considerations elsewhere. As an example, […]
Perpetuity Concept in Financial Analysis
Introduction The Perpetuity concept refers to the present value (PV) of equal periodic cash flows that investors will receive over an indefinite future period. We need to calculate the present value of perpetual cash flows for a variety of reasons, some being: In business and finance, perpetuity is a regular payout of the same amount […]
Terminal Value of the Business
What is Terminal Value? The Terminal Value (TV), or as it is also known, continuing value or horizon value, is the value of an investment or a business at the end of a specific period. A firm or project potentially has an infinite life, meaning its value is the Net Present Value (NPV) of cash […]