Comparing Net Tangible Assets and Price to Sales Valuation Method

Running head: FINANCE
Finance
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FINANCE1
Table of Contents
Assignment 2...................................................................................................................................2
Question 1........................................................................................................................................2
Question 2........................................................................................................................................4
References........................................................................................................................................6

FINANCE2
Assignment 2
Question 1
a) Comparing Net Tangible Assets and Price to Sales Valuation Method
Net Tangible Assets Price to Sales Valuation Method
 The net tangible assets of the company
represent the total amount of tangible
(physical) assets less any liabilities
and intangible assets.
 The net tangible assets of the company
is derived as: NTA = Total assets –
Intangible assets – Total liabilities.
 The net tangible assets of the company
is applied with various multiples in
order to assess the financial position
or a financial performance of a
fund/company. The net asset value per
share of a company is also one of the
key measure derived considered for
valuation.
 The net tangible assets of the company
is subjected to inclusion of accounting
figures which may be reported at
 The price to sales ratio for the
company on the other hand represents
the price of the company in respect to
the total sales generated by the
company.
 The price to sales valuation is derived
as: Market Capitalisation/Annual
Sales.
 The price to sales valuation method is
also applied for determining the
fairness of the market price of the
company with respect to the total sales
made by the company. Market Cap of
the company with respect to sales in
relation to the industry average is then
reviewed.
 The sales included in the valuation
process can be a mixture of credit and