The asset-based valuation approach estimates the value of an asset by calculating the difference between the value of total assets and its outstanding liabilities. In other words, the asset-based valuation assumes that the company is liquidated, sells all its assets, and then pays off all its liabilities. The residual value after paying off all liabilities is the value to the investor.
The asset-based valuation approach indirectly assumes that the asset will stop operating and essentially provide a liquidation value.
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DISCLAIMER: I’m not a financial adviser. These videos are for educational purposes only to share my own opinions with no guarantee of gain or losses. No official financial advice is being given. Please always check with a professional before making any investments or financial decisions.
