Calculation of Intrinsic value, Yield Value, and Fair value of valuation of shares.

1. Haribhai V. Desai College, Pune 411002
Department of Commerce
E- Content Development Cell
Third Year B. Com.
Valuation of Shares
Designed by Dr. Yashodhan Mithare

2. Learning Objectives
1. To understand methods of Valuation of Shares
2. To understand calculation of intrinsic value method
3. To understand steps in calculation of Yield Value Method
4. To understand calculation of Fair Value

4. Steps to calculate intrinsic Value of Shares
1. Take the total of assets (Adjustment Value)
2. Deduct the total of all third party liabilities
3. Answer is Net Valuation of Business
4. Divide Net Valuation by number of equity shares
5. Answer is Value Per Share as per Intrinsic Value Method

5. Valuation of Shares as per Intrinsic Value Method
Value Per Share =
Net Assets
No. of Equity Shares
Value Per Share =
3,70,000
40,000 shares
Value Per Share = Rs. 9.25
Total Value of Assets :
Goodwill 50,000
Fixed Assets 3,50,000
Current Assets 2,00,000
Total 6,00,000
Total Value of Liabilities :
Current Liabilities 2,30,000
2,30,000
Net Valuation (6,00,000 – 2,30,000) 3,70,000
Total

6. Steps to calculate Yield Value of Shares
1. Calculate Average Profit from given information
2. Deduct General Reserve as per the adjustment
3. Calculate super profit (Profit ÷ Normal Rate of return X 100)
4. Divide Profit by number of equity shares
5. Answer is Value Per Share as per Yield Method

7. Valuation of Shares as per Yield Value Method