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Determination of the value of a company's stock based on earnings and the market value of assets.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


The process of determining how much an asset, company, or anything else is worth. Valuation is highly subjective, but it is easiest when one is considering the current value of tangible assets. For example, determining how much a willing buyer will pay a willing seller for a house right now is easier than determining the value of what a company's brand recognition might be in 10 years. Valuation is important in fundamental analysis, the practitioners of which usually consider a company's earnings to be indicative of its value.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A process for calculating the monetary value of an asset. Valuation is subjective and results in wide disparities for the values of most assets.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.


Valuation is the process of estimating the value, or worth, of an asset or investment.

Sometimes it means determining a fixed amount, such as establishing the value of your estate after your death. Other times, valuation means estimating future worth.

For example, fundamental stock analysts estimate the outlook for a company's stock by looking at data such as the stock's price-to-earnings (P/E), price-to-sales, and price-to-book (net asset value) ratios.

In general, a company with a high P/E is considered overvalued, and a company with a low P/E is considered undervalued.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.


(1) The process of estimating the worth of something. (2) The estimated worth given to something.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
References in periodicals archive ?
Given the variety of valuating functions and methods for defining [B.sub.q] the combinatory that could be established is very wide.
For a test length of Q items, accepted that during the test the valuating function will be changed no more than once and that, if changed, it will be from MC to FI and not the reverse, it is possible to define (Q+1) different patterns to define the valuating function according to the item position in the test, from the selection of zero items with FI to the selection of the Q items based on FI.
We consider that the definition of the number of items selected according to each valuating function will make it possible to situate any CAT with flexibility between the limits of accuracy and security that define the two functions.
Valuating functions and stratification of the bank: All the possible combinations of FI and MC were simulated (31 for ACT bank and 21 for eCAT).
For each condition [2 (number of item banks) * 31 or 21 (number of items selected with each valuating function) * 3 (number of strata)], the same 500,000 simulees were employed.
When FI was the only valuating function employed, the overlap rates obtained were over the values considered acceptable (Way, 1998).
When just one stratum was used and MC was the valuating function employed, one examinee could, through chance, receive only poorly informative items.
Our goal was to study the effect of the variation of the item valuating functions and the use of changing [B.sub.q] composition throughout a CAT.