An approach to calculate the value of a company

Abstract

Companies need to understand how they are valued. The fundamental reason for this is that investors invest in companies that create the most value. Companies require investment to fund new business and to enable them to play a leading role in the globalization and consolidation of industries. Investors want to invest in the companies that will create the most value. If a company wants to create value, it is essential that they understand how their actions translate into increased value. This paper presents methods and models for valuing a company. A tool based on Microsoft Excel is developed. The tool is currently being piloted with customer engagements in a large IT consulting organization. © 2011 IEEE.