The residual value of the company shows the net cash amount that the owner can count on in the event of the liquidation of the company and the sale of all assets separately. It is calculated when the company is in bankruptcy, is unprofitable or has low profitability, as well as when a decision is made to liquidate. In this case, the company is assessed as a real estate object.
Instructions
Step 1
Analyze the data from the most recent enterprise accounting balance sheet. List all the assets of the business that you want to put up for sale.
Step 2
Develop a timetable for the liquidation of assets and determine the exposure period. This is necessary in order to determine the time intervals from the day the object is put up for sale until the day the transaction is actually concluded. Please note that different types of assets will take different periods of time to be realized.
Step 3
Determine the amount of gross proceeds from the liquidation of assets. To do this, it is necessary to evaluate each object of the enterprise. This can be done directly or indirectly. The first method involves comparing assets offered for sale with similar assets that were previously sold. The indirect method is carried out by determining the market value, which is reduced by the amount of the discount. The second value depends on the exposure period, the attractiveness of the object and other factors.
Step 4
Decrease the estimated residual value of the assets by the direct cost. These include commission costs for services of law and appraisal firms, taxes and fees. Discount the resulting values at the valuation date at a discount rate that takes into account the risks associated with the sale of the property.
Step 5
Subtract from the residual value of assets the costs that are associated with the costs of maintaining inventories of work in progress and finished goods, machinery, equipment and equipment, as well as the operation of real estate. These costs are calculated up to the actual date of the sale of the assets.
Step 6
Obtain the total residual value of the business and add to it the operating profit generated during the liquidation period. If a loss is expected, then this amount is deducted.
Step 7
Adjust the resulting value by the amount of preferential rights to payments and severance payments to company employees, settlements with creditors and the implementation of mandatory payments to the budget.
