Asset valuation serves to estimate a value before an operation that involves it.
Valuation is the process and result of valuing : appreciating or recognizing the value of something or someone. The verb value can also refer to indicating the price of a good or service.
Asset Valuation
Asset valuation , for example, is the procedure carried out to estimate the value of a company, a share, a patent , etc. This assessment is usually developed before defining an acquisition or an investment, to name two possibilities.
It is part of the field of finance, and is considered a model , since investors use it consistently every time they want to calculate the profitability that should be demanded when carrying out an operation such as those mentioned in the previous paragraph. , taking into account the risk that this entails. Based on certain works carried out by the American economist Harry Max Markowitz , this valuation model was developed by Jan Mossin, William Sharpe, Jack L. Treynor and John Lintner, although without link between them.
The acronym by which this model is known is CAPM and its specific application is the calculation of the discount when the investment portfolio is fixed income . In the case of individual assets, the stock market line should be used, a representation of this model that is more appropriate because it contemplates concepts such as non-diversifiable risk, systematic risk and the class to which said assets belong. This line is used to know the proportion between the risk and reward of any asset in reference to the general market.
in sport
In the field of sports, assessment is also used. In basketball , the rating is calculated from different statistics and allows the measurement of the players' performance .
To measure a basketball player's rating in a game, his points, assists, rebounds, blocks or blocks, steals and fouls received are added. Missed shots, ball losses, blocks received and fouls committed are subtracted from this score . The result is the valuation in question.
Suppose a basketball player scores 14 points , with 7/10 shooting from two-pointers and 0/1 from three-pointers. He also takes 6 rebounds , loses the ball twice, receives three fouls and commits another two. Taking into account what was explained above, its rating is 15 :
14 points + 6 rebounds + 3 fouls received = 23
3 missed two-point shots + 1 missed triple + 2 turnovers + 2 fouls committed = 8
23 – 8 = 15 rating
Art appraisal
Art valuation , meanwhile, combines financial and aesthetic criteria to determine how much an artistic work is worth on the market . Auctions are carried out based on these valuations. That said, it is clear that the most important aspect in this case is not the aesthetic one, but the financial one, although it is impossible to leave aside subjectivity and cultural background when making the estimate.
The valuation of art combines subjective and financial aspects.
To carry out this work it is necessary to take into account various sources and purchase their data ; In this context we find collectors (both private and corporate), art auction houses, statistical data on sales, market analysis and the activities of the most relevant galleries of the moment.
The objectives of art valuation go beyond investment, collection and financing, as it is also carried out to value assets, for insurance planning, real guarantees and other topics. Furthermore, we must not forget that the works can be contemporary or old , by important or little-known artists.