Valuation of shares is the process of determining the fair value of a companys shares. It is done using quantitative techniques, such as analyzing the companys financial information, such as current earnings, cash flows, assets, capital structure, and future cash flows. The main purpose of share valuation is to determine the true value of a companys shares and compare it to the current market price. This is done for various reasons, such as bringing on investors, selling the company, purchasing the company, selling off assets or portions of the business, or exiting a business.

There are various methods of share valuation, and the choice of method depends on the purpose of valuation, data availability, nature, and volume of the company. Some of the popular methods of valuation share include:

• Market Approach: This approach values a company based on the market prices of similar companies. The market value of the shares is considered for valuation, and this approach is feasible only for listed companies whose share prices can be obtained in the open market.

• Net Asset Value (NAV) Method: This method is based on the NAV and share value of the company. The value of each share is calculated by dividing the companys Net Asset Value (NAV) by the total number of shares. A companys net asset value is the difference between its net worth and total liabilities. To calculate the worth of a share, the net value of assets is divided by the number of outstanding equity shares.

• Earnings Per Share (EPS) Method: This valuation technique measures how much money the company makes each year per dollar of invested capital. Invested Capital is the amount of money invested in the company by both stockholders and debtors. The ratio is expressed as a percent, and one looks for a percent that approximates the level of growth that is expected. In its simplest definition, this ratio measures the investment return that.

It is important to note that there is no one valuation method that fits any purpose, and using a combination of methods generally provides a more reliable valuation.