Income Based Valuation of IT Companies: Methodological Issues Related to Invested Capital

Kód výsledku v IS VaVaI

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Nalezeny alternativní kódy

RIV/61384399:31110/15:00049175

Výsledek na webu

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DOI - Digital Object Identifier

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Jazyk výsledku

angličtina

Název v původním jazyce

Income Based Valuation of IT Companies: Methodological Issues Related to Invested Capital

Popis výsledku v původním jazyce

IT companies´ valuation is a difficult task for various specific characteristics of their nature and operational business model. It is well know that basic measures of financial analysis such as ROCI (Return on Capital Invested) will fail since there isusually no need for high capital investments (CAPEX). If the venture is profitable, the profitability of investments and the whole capital employed (derived from accounting figures) would never converge towards the cost of capital. This is economically without any reasonable explanation and hence unsustainable. The reason is, as we argue in this paper, the absence of identifiable intangible assets (marketing model, domain names etc.) which are plentiful in IT companies on the company´s balance sheet. Thus we pledge for their ?accounting activation? bringing the economic rational of the DCF (and EVA) modelling approach will eventually apply also for IT companies with its specifics.

Název v anglickém jazyce

Income Based Valuation of IT Companies: Methodological Issues Related to Invested Capital

Popis výsledku anglicky

IT companies´ valuation is a difficult task for various specific characteristics of their nature and operational business model. It is well know that basic measures of financial analysis such as ROCI (Return on Capital Invested) will fail since there isusually no need for high capital investments (CAPEX). If the venture is profitable, the profitability of investments and the whole capital employed (derived from accounting figures) would never converge towards the cost of capital. This is economically without any reasonable explanation and hence unsustainable. The reason is, as we argue in this paper, the absence of identifiable intangible assets (marketing model, domain names etc.) which are plentiful in IT companies on the company´s balance sheet. Thus we pledge for their ?accounting activation? bringing the economic rational of the DCF (and EVA) modelling approach will eventually apply also for IT companies with its specifics.

Druh

D - Stať ve sborníku

CEP obor

AH - Ekonomie

OECD FORD obor

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Projekt

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Návaznosti

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Rok uplatnění

2015

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název statě ve sborníku

Financial Management of Firms and Financial Institutions 10th International Scientific Conference

ISBN

978-80-248-3865-6

ISSN

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e-ISSN

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Počet stran výsledku

11

Strana od-do

380-390

Název nakladatele

VŠB - Technical university, Ostrava

Místo vydání

Czech Republic

Místo konání akce

Czech Republic, Ostrava

Datum konání akce

1. 1. 2015

Typ akce podle státní příslušnosti

EUR - Evropská akce

Kód UT WoS článku

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