**SUMMARY OF VALUATION OF SHARES :**

**A. Net Asset Value Method **

Step 1 : Compute Net Operating Asset (Refer Capital Employed Computation under Valuation of Goodwill).

Step 2 : Add Value of Goodwill and Non operating Assets if any (eg. Investments)

Step 3 : Divide the aggregate of Step 1 & 2 by the number of shares outstanding as at Valuation date.

**B. Yield based**

The Various Methods under this are Dividend Capitalisation Method Earnings Capitalisation Method & Productivity Factor Method.

**1. Dividend Capitalisation Method**

Step 1 : Ascertain Dividend per share

Step 2 : Ascertain Normal rate of return.

Step 3 : Capitalise the Dividend per share at above normal rate of return to arrive at value per share.

Value per share = DPS / NRR x100

(Where DPS = Dividend Per Share

NRR = Normal Rate of Return)

**2. Earnings Capitalisation Method**

Step 1 : Compute Earnings Per Share (EPS).

Step 2 : Ascertain Normal Rate of Return (NRR).

Step 3 : Value per share is arrived by capitalising at NRR.

Value per share = EPS X100/ NRR

**3. Productivity Factor Method**

Step 1 : Computation of Productivity factor

(a) Compute weighted average net worth of a given period.

(b) Compute weighted average Profit After Tax (PAT) for the same period.

(c) Compute Productivity factor

Production Factor = Weighted Average PAT x 100/ Weighted Average Net Worth

**Step 2** : Ascertain Net worth on the valuation date.

**Step 3 :** Compute Future Maintainable Profit (FMP).

Future Maintenance Profit = Net Worth x Productivity Factor.

**Step 4 :** Ascertain Adjusted FMP ie., Future Maintenance Profit as per Step 3 adjusted for changes in business.

(eg. Change of tax rate).

Step 5 : Ascertain Normal rate of return.

**Step 6 :** Capitalise Adjusted FMP at NRR to arrive at value of business.

**Step 7** : Add : Non operating Assets (eg. Investments) to above value of business.

Less : Preference Share Capital (if any)

**Step 8 :** Value per share = (Step 6 + Step 7) / Number of Shares

**4. Market Price Method**

**Step 1 :** Ascertain Earnings Per Share.

**Step 2 :** Ascertain from published sources the Price Earnings Multiples for similar size Company operating in the same industry.

**Step 3 :** Value per share = EPS X PE Ratio.

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