I’m trying to apply Ohlson price model to see the value relevance of exploration and evaluation expenditures in extractive industries, but I realize the biggest oil explorers in my country are government owned and are not listed on the stock exchange. How can I go about determining the share price that can give a realistic value relevance indicator?
Hello Erick. I think one of the ways is to consider liquid results minus values compromised to pay return to the shareholders, and this result divided by regular/common stocks in circulation.
Maybe you can see these theme in the IASB rules - in the part concerning to the Results report. I hope these can be useful. Best regards
One straight forward, and useful answer is as follows:
Value of the firms (total) = Net profit (mean of, say, last three years, multiplied a multiple.
For the value of the multiple, look at similar firms which are listed and calculate their multiple values.
Paradoxically, although there is no easy way to do this, however, it is possible to conduct a large scale empirical study. Venture capital funds, in their various funding rounds, not only have to make the calculations but back them up with their own money. Thus, with one can perform such empirical study relating venture capital valuation to whatever firm and industry level variables that available.
Hi,
I can see four methodologies, all unfortunately with advantages and drawbacks:
- The present value of discounted cash-flows to the firm, or the present value of discounted cash flows to equity holders;
-The multiple approach (multiple x EBIT or EBITDA or sales...);
- The fair value of assets minus debt (value of the shares)
- and the last one: The value of stocks may be considered as an option on the assets of the firm with exercice price equal to the terminal value of the debt to be reimbursed.
Crossing some methodoliogies may be relevant (if possible) to get some coherence for your final choice of valuation "ranges".
best regards
I sincerely appreciate all your efforts in helping me to deal with this matter
https://www.researchgate.net/publication/303830251_Macroeconomic_Determinants_of_the_Behavior_of_Dhaka_Stock_Exchange_DSE
Article Macroeconomic Determinants of the Behavior of Dhaka Stock Ex...
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