hello everyone you're watching saheb Academy if you like our videos then please subscribe to our Channel and also hit the bell again for the regular updates and also follow us on Instagram so have Academy now let's go to the video hi everyone in this video we are going to start this new chapter called as valuation of shapes now this chapter valuation of shears it's a very simple and one of the easiest chapter of corporate counts why because this chapter is same as good will here also you don't have to prepare any accounts you don't have to prepare any accounts you just have to apply some math to do valuation of shoes to find out the value of shears okay that's it simple you just have to calculate the value of the company shear valuation of shears yeah valuation of shears is the process of knowing the value of company ships we are just finding out the value of the company ship that's it that's all you have to do in this chapter okay here there are some methods right three methods are there and with those three methods you are going to find out the value of the shield okay it's a very simple chapter fine so here there's some Theory here when valuation of shares is required see you can also find this in textbook also okay this is not important okay the methods are important and the problems are important this is just theory this may come for two marks fine so here you see when valuation of shares is required whenever there is merger acquisition reconstruction amalgamation valuation of shares is required fine and then conversion of preference shares to equity whenever whenever the company convert the preference sheets to equity shares then also the valuation of shares is required fine and then implementing implementing employee stock ownership plan okay whenever whenever company implements VSOP then also the valuation of shares is very essential fine and then if there's an attack assessment under the wealth tax or gift tax then valuation of shares is very important all right and then we have bank loan based on shares as security see this bank loan based on shares as security see whenever a member of a company right the member of a company if he takes a loan and he pledged the shears if he pledges the shears as a security then then the valuation of shares is very essential fine when the loan is taken on the security of ships fine and then if the company goes for bonus issue a rights issue right issue of bonus shares or right shares to its existing shareholders so whenever the company goes for bonus issue or rights issue then valuation of shares is required fine and then there are many more situation when valuation of shares is required you can find all that in textbook but this is not important as I said the important is the methods and the problems fine so now we are going to see the methods of valuation of shares fine so let's do that now here we have methods of valuation of shares see how simple they are and in your Beacom syllabus and BB syllabus you have in valuation of share chapter corporate accounting you have only three methods fine you have only three methods in your syllabus okay net assets method yield method and fair value method now all these three methods are very simple in the coming videos what are we going to do is in the coming three videos right the second third and fourth video we are going to discuss each and every method properly in detail and we are going to use that method to solve the problem in that video okay so that we can understand how to apply that method how to use that method fine but here in this introductory video we are in this con sub video we are just going to have an overview of all these three methods so first as I said we have net assets method and this method is based on asset approach here we have to calculate the net assets here we have to calculate the net assets available for equity shareholders why because here we are calculating the value of shares using these methods right so we are calculating value of not just any shapes we are calculating the value of it credits so we have to concentrate on equity shareholders fine so we need net assets available only for equity shareholders so we need net assets available only for equity shareholders and then we are going to divide that by number of shares okay but you need to understand how to calculate net assets fine so that we are going to see in the next video okay when we are going to solve the problem with the net assets method fine so this is based on asset approach and this is what you have to do you have to understand how to calculate the net assets and then we have yield method now this method yield metered this matter focuses on future this method focuses on future what will happen in future what the company the certain company will earn in future okay focuses on future now what is yield yield means right it means result right if you sow crops now yeah if you plant the crops now then what harvest will you get in future if you invest now if you invest now in the company then in future what you will get okay this method is focused on future it focuses on future so you have to understand this method yield matter see this yield method is based upon these two things see rate of dividend okay what dividend will you get and on the basis of that you will calculate the value of shears and then it is also based on the rate of burning what earning will you have if you invest the money right now in a certain company then what earning will you have in future on the basis of that we are going to calculate the value of shears right with yield method it focuses on future okay yield method focuses on future simple here it is acid based here it is future based okay what will happen what earning will happen in future it is market based okay how the market will be in future understood sweetie this is market based fine and then we have fair value method now see fair value method is not a method why is that because fair value method doesn't agree with any of these methods specifically what it says is just take an average of the value of net asset and value of yield method what does it say it says that just take an average whatever value for example if you get right for value here and then eight value here right you are just going to add them up four plus eight is how much 4 plus 8 is 12 so 12 by two that's all six is the fair value of the shares of that certain company you understood here in this method we just take an average of the value which you have found in a desert method and value which you have found through real matter okay this is just an average method it's a very simple method here to understand the method you just have to put some brain ok just some mind into this and this this is nothing this is not a method at all ok this is very simple fairly limited fine so in the next videos in the coming videos we are going to solve the problems with each and every methods and we are going to see how these method works fine and we need to understand how to calculate net assets and what precautions do we have to take while calculating the value of share with net asset method ok so in the next video we are going to focus on net assets method and we already solved the problem and then in the third video yield method and problem and in the fourth video fair value method and a problem ok and in your exams right for your 15 bucks problem or 14 more problems depending upon your universities write long problems in long problems you will get all the three metals why because this chapter is really simple they can't give one particular method this chapter is really simple and very easy so that is why they will give all the method in your okay for the long problems fine for the big problems so this is the simple chapter so please watch the next video so that you can understand how to solve the problem which each and every different methods fine okay you understood right the methods yes this was just overview of these methods fine okay now there's one more last thing that I need to tell you see here there are lots of duplicate names of the method for example here net ascent method has lots of different different names it has intrinsic value name then it has breakup value method balance sheet method or acid backing method so there are lots of different different names okay but you don't need to be confusing exams if you go through them once right then it'll be in your mind okay if you see breakup value method then it might come to you in your mind that it will come to your mind that they mean neck acid method and you will solve in net acid method fine and then yield method also has different names he earning capacity method learning capitalization method dividend yield method see by just understanding the concept only that yield is based on future and it is based on earning right B it is based on return right what you will get in future so earning earning you understand dividend but it is better to see in your textbook and what all duplicate names are there okay there are many more also fine so here intrinsic intrinsic means what it is the value it is the intrinsic value materialistic value right so intrinsic asset value so then brake balance sheet balance sheet also you can understand that assets are there in balance sheet and acid backing method so like that will be in your mind you just have to go through them once so that it will be in your mind and you will not get confused in exams fine so there are lots of duplicate names of these two methods but there is only one name here for fair value method but these two methods they have lots of different different names and mostly in your become and BB exams there is a chance that they will use this intrinsic value mostly okay I have seen lots of papers that they use sometime intrinsic value and sometimes not acid method fine so you have to be careful okay fine okay then