APPLICATION OF FINANCIAL MODELING METHODS FOR BUSINESS VALUATION

The subject of the study is the exploration and development of methodological approaches for assessing the value of a business, utilizing financial modeling methods. Special attention is devoted to modeling the financial metrics of a company with the aim of evaluating its future value. The primary objective of the research is to conduct an assessment of a company’s value, implementing an investment project at a specific future moment. This entails considering both the current trends in the company’s development and prospective changes in its financial condition. The paper employs classical approaches to business valuation—namely, the income, comparative, and cost approaches. The distinctive feature of this research lies in the integration of these approaches with forecasting future financial indicators of the company through financial modeling. Furthermore, aspects of adapting these approaches for evaluating the company at a future date are thoroughly examined. The analysis of business valuation methods allows identifying their advantages and limitations, as well as the requirements for the financial model concerning its application in business valuation. Based on this analysis, refined methodologies for calculating key indicators are proposed to enhance the accuracy of the company’s valuation. It is essential to underscore the significant importance of business valuation in attracting investments for companies, particularly within the startup context. While the absence of collateral in a company increases risks, the potential for revenue growth can offset these risks for venture investors. A qualitative assessment of the business’s value on a future date, utilizing financial modeling methods, enables a more precise determination of the investor’s share, ensuring an adequate return on investment.

financial modeling, valuation methods, investment project, revenue approach, comparative approach, cost approach, business valuation, forecasting financial indicators, future value, cost modeling

Bezruchko D. S., Dmitriev N. D., Zaytsev A. A., Ungvári L. Application of financial modeling methods for business valuation. Biznes. Obrazovanie. Pravo = Business. Education. Law. 2024;2(67):13—20. DOI: 10.25683/VOLBI.2024.67.940.