TO THE QUESTION OF ASSESSING BUSINESS VALUE BY DIRECT CAPITALIZATION OF EXPECTED INCOME
This article is devoted to the consideration of one of the main methods of the income approach to evaluating a business (enterprise), that is, the method of direct capitalization of the expected income from the business functioning. It is advisable to use this valuation method to simplify and speed up the calculation of the real value of a business if a net operating income that is constant in magnitude and equal in terms of forecasting is predicted, the receipt of which is not limited in time. The method is based on the use of capitalization coefficient, which allows to transfer capital flows from the use of the object to its value. The advantages and disadvantages of using the direct capitalization method in assessing the value of a business are noted. To calculate the method of direct capitalization, a number of procedures must be carried out, such as: preparing the necessary information, choosing the amount of profit, calculating an adequate capitalization rate, determining the preliminary value of the cost, and adjusting for the presence of non-functioning assets. The article presents various methods for determining the coefficient (rate) of capitalization that can be used in practice (the method based on the financial indicators of similar enterprises (similar business), the method of determining the capitalization coefficient is based on determining the degree of "proximity" of dissimilar enterprises-analogues, the market multiplier method, the capitalization method according to the rate of return), as well as the methods of calculating the recapitalization rate (rate of return on capital): the method of straight-line recapitalization (or Ring's model), the method of calculating the recapitalization coefficient by the profitability ratio of investments (or the Inwood model), the method of calculating the recapitalization rate at a risk-free interest rate (Hoskald model). For the case of an unlimited time period for obtaining variable cash flows (long-term business), it is recommended to evaluate the value of the business using the Gordon model.