Handouts 5. DiSCussion DCC on Blackboard rubric in 3. Chapter 13: Having evaluat
ID: 426130 • Letter: H
Question
Handouts 5. DiSCussion DCC on Blackboard rubric in 3. Chapter 13: Having evaluated ABC Family Business Inc.'s current financial position the chapter proceeds by using the financial metrics created to determine the value of the firm going forward. Business people operate in a world of financial accountability and value everyday. For privately owned business families the "market" yardstick is not readily available. Unlike the publicly owned company that lists a price that each share is worth in the marketplace every day, the private company value is much harder to ascertain. Business valuation firms are often used to value companies that have no public market. But all business owners should understand the basics of valuation so they can determine what adds and subtracts from their company's value in their day to day management of the business. The discussion on valuation is designed to help the business owner understand the valuation process and what exactly drives value in the family business. Please discuss the following questions and write your responses in a Word document and using the individual assignment requirements format. 1. Why is financial literacy so important among family business owners? 2. What does the concept of fair market value refer to? 3. Why value a private family business? The final is posted for week 6. F7 OO F4 FS 4Explanation / Answer
Why financial literacy is important among family business owners?
See every business in current time is operating under a lot of competition be it an MNC or a family owned business the business environment has become so competitive and the very sustainability of businesses are under question sometimes.
It is generally seen that family business owners are less educated since their career goal was to join the business thus they gathered the necessary education and entered into the business but the situation has changed and is changing day be day. The business requirements are getting complex and every family business owner should have the basic understanding about the finance which they encounter on daily business to take the business more forward.
Financial literacy will help the business owners to arrange funds effectively and at affordable rates and also understand the financial needs of their business in the best possible way.
Concept of fair market value:
The concept of Fair Market Value or FMV refers to the price an asset or business will sell into the open market.
It is an accurate assessment or valuation of any business or asset where the prospective buyer is ready to give that price free from any undue pressure working in his own self-interest and the seller is ready to sell the asset at the price free from any undue pressure working for his own self-interest.
This term is commonly used in tax assessment and real estate markets.
Why value a private family business?
The reasons are many such as:
A private business owner must have the knowledge about the value of his business and he should understand how the valuation is done. The owner should know what business management processes adds value to his business and what subtracts value from his business so that he can concentrate on activities which is increasing the value of his business and cease those activities which is taking value out of his business.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.