Finance and Accounting Report 2022

Running Head: Accounts
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Rio Tinto Limited, Wesfarmers Limited, Brambles Limited,
Ramsay Health Care, and Woolworth Limited.
Finance and Accounting
9/27/2019

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Contents
Introduction......................................................................................................................................2
Valuation method of the different assets.........................................................................................2
Different types of the assets held by the different companies.........................................................4
Types of the valuation method held by the company......................................................................7
The use of the different asset valuation method by the company....................................................8
Conclusion.......................................................................................................................................9
References......................................................................................................................................11

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Introduction
The report is prepared in regards to the five companies to analyses the conceptual
framework of the accounting. There are many types of the assets which are used in the company
and in this report the valuation of the asset will be done in regards with the five companies which
are Rio Tinto Limited, Wesfarmers Limited, Brambles Limited, Ramsay Health Care, and
Woolworth Limited. The types of the assets which these companies used will be elaborated in
this report such as tangible assets, intangible assets, fixed assets, etc. There are different types of
the valuation method which is accessed by the companies which help in determining the
economic value of the asset (Sacui and Szatmary, 2015). Valuation is important to analyses the
accurate business value of the assets in the market. By valuation the company knows how much
worth of asset they hold. In accounting and finance the valuation of the asset is very important
activity.
The campiness also does the valuation of the asset so that the value of the taxation can also be
analyzed. With the help of the book values the asset valuation is evaluated to analyses the market
value of the assets. The recent annual report of these five companies will be analyzed so that
different valuation methods used by the different companies can be ascertained. In this report the
usefulness of this valuation method will also be discussed which helps in providing the important
information (Bauer, 2014).
Valuation method of the different assets
There are several methods of the valuation of the asset which are used in the accounting
and financing so that operating and the non-operating asset can be used. The operating assets of
the company are the main source of the revenues, income and the cash flow. By using the two
different concepts the valuation of the operating asset is done with the going concern value and
the liquidation value (Damodaran, 2016). The banking investment companies and the private
equity companies use the going concern method to value the assets as liquidation method is
generally used when distressed companies are considered. When the fair market value of the
asset is determined than it is called the process of the asset valuation. Both the measurement of
the subjective and the objective is done with the asset valuation. There are basically three types
of valuation method which has described below:

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Net asset value: This value is also known as the net tangible asset value where the
tangible asset value is less than the liabilities and the intangible assets on the balance sheet of the
company. The minimum worth value of the asset is the net value asset which also provides the
useful floor. In this valuation of the asset the intangible assets are excluded (Popovic, et al.,
2015). If the market value is lower than the book value of the stock then it is undervalued which
indicates that trading stock is at the discount to the book value per share.
Absolute value: On the basis of the characteristics of the asset, the assets are valued in
the model of the Absolute value. This model is also known as the DCF model which is
discounted cash flow where the assets of the company are valued at the opportunity cost of the
capital and the future cash flows such as bonds, stocks, real estate, etc. this method includes
several things which are stated below:
Discounted dividend models: The stock price is valued at the present value by
discounting predicated dividends (Aggarwal, 2016). If the trading prices of the shares are higher
by obtaining the value of the DDM, then the stock is undervalued.
Discounted free cash flow model: In this model, the present value of the assets are
evaluated by discounting the weighted average cost of capital.
Residual income valuation model: This valuation of the asset is calculated as the net
income for the post-payment of the outside parties and the payment of the suppliers less charge
for the cost of capital.
Relative valuation ratios: The valuation of the asset is done in this method by observing
the market prices of similar assets (Russell, 2016). By comparing the assets with a similar asset
of the market the value is determined in the market. The stocks of the company are basically
valued on the price-earnings ratio and the price to cash flow ratio.
Issues recognize under the valuation of the asset: Under the valuation of the asset,
there are many issues which has risen such as the problem of impairment of the asset. When the
assets are badly damage or the market value of the asset has been reduced then it creates the
problem. There are some negative issues also which creates problems in the company such as the
legal issues which have a great impact on the valuation of the assets. The total assets of the
balance sheet get reduced by the disposal of the assets before the end of the useful life so this
creates the issue in the company (Rojo-Ramírez, 2014).