Course code Ekon5121

Credit points 2

Business Evaluation

Total Hours in Course80

Number of hours for lectures12

Number of hours for seminars and practical classes12

Independent study hours56

Date of course confirmation18.12.2018

Responsible UnitInstitute of Finance and Accounting

Course developer

author Finanšu un grāmatvedības institūts

Gunita Mazūre

Dr. oec.

Prior knowledge

Ekon5082, Financial Accounting I

Ekon5090, Microeconomics Analysis

Ekon6013, Financial Management

Course abstract

Business evaluation is a multi-faceted process that results in determining the business (enterprise) value. Therefore, the study course provides profound knowledge on the valuation process, business valuation approaches, methods and cases of their application, understanding of the factors affecting business value, and it also develops the ability to analyse processes at the management level aimed at increasing business value by developing a strategy for future development. The students acquire essential knowledge on the valuation approaches and methods which allow to choose the most appropriate ones considering the value affecting factors as well as the fundamentals of the valuer’s code of ethics.

Learning outcomes and their assessment

1. Knows and understands the evaluation process, approaches and methods. Knows the content of business information and the purpose of evaluation. Knows the process of development and value determination of intangible assets - independent work.
2. Knowledge of information reliability, types of values and factors affecting the value - discussion in class.
3. Understands adjustments to the financial statements and business valuation process using three valuation approaches and methods: asset based approach, market value approach and earning value approach - business valuation report with calculations.
4. Able to make adjustments to financial statements, calculate financial ratios and determine business value using a variety of approaches and methods. Students are able to analyse the results, understand the causes and draw conclusions. Understands the process of valuation of intangible assets - business valuation report with calculations, calculations in classes.
5. Able to solve various tasks independently, collaborate in a group with colleagues to get the information they need, and develop a valuation report to determine business value and opportunities for the increase of the corporate value - independent work.
6. Able to present the business value determination process and justify the set value as well as to make a presentation on the selected intangible asset (brand) and its value - independent work, presentation of results in class.
7. Able to plan and solve tasks assignments responsibly - independent work.
8. Able to take part in classes and take responsibility for work results and its analysis. Able to present the results of independent work - independent work, presentation and business valuation report.

9. Ability to apply the acquired theoretical knowledge and practical skills on business valuation approaches and methods, understanding their advantages and disadvantages as well as the peculiarities of applying valuation approaches and methods, understanding the need for adjustments of the financial statements and valuation of intangible assets, ability to identify and classify business value influencing factors, analysing processes at the management level aimed at increasing business value by developing a future development strategy - independent work, classroom work, business valuation report, presentations.

Course Content(Calendar)

1. Methodological basics of business value determination (lectures - 1 h)
Business valuation cases, their types, goals. Object and subject of business valuation, business as a commodity. Business valuation for a specific purpose (functioning company, reconstruction needs, investments, stock valuation, ecological damage assessment).
2. Business valuation standards and principles (lectures - 1 h)
Principles of business valuation. International Valuation Standards Committee. International Valuation Standards. Group of European Valuation Associations. European Valuation Standards. Latvian Association of Property Appraisers and Code of Ethics. Latvian Valuation Standards. Evaluation methodology and methodological guidance.
3. Types of business value and factors affecting valuation. Main components of the business valuation report (lectures - 2 h)
Explanation of the definition of market value. Values apart from the market value. Mandatory components of the business valuation report. Evaluation procedure.
4. Preparation of information necessary for business evaluation process (lectures - 1 h)
External information on business activity in the region, industry. Types of external risks. Internal business information.
5. Short analysis, normalisation and transformation of financial statements in the evaluation process (lectures - 1 h, practical work - 2 h)
Adjustment of income and expenses, obtaining of normalised profit. Adjustment of the balance sheet items. Analysis of the balance sheet and the profit or loss statement. Cash flow analysis and planning. Calculation of financial ratios and interpretation of results
6. Selection of the most important approach and method of business evaluation (lectures - 1 h)
Business valuation methods and their application. Indicators characterising business value. The present and future value of the business and the expected operating period. Cash flow and the discount rate.
7. Business valuation applying the asset-based approach, its principles and advantages (lectures - 1 h, practical work - 1 h)
The adjusted net asset value method. The method of liquidation.
8. Business valuation applying with the market value approach, its principles and usability (lectures - 1 h)
Basic principles of analogue company selection. Predecent transactions. Profit and cash flow multipliers. Industry coefficient method. Public company comparables method.
9. Business valuation applying the earning value (income) approach, its valuation basis (lectures - 1 h, practical work - 2 h)
Capitalisation of earnings method. Discounted earnings method. Determination of discount and capitalisation rates. Development of the projected profit or loss and cash flow.
10. Intangible, unlisted assets, their importance in the structure of business value (lectures - 2 h, practical work - 2 h)
Types of intangible, unrecognised assets and their role in business value structure. Valuation methods for intangible assets. Applying the asset-based approach to the valuation of intangible assets. Using the market value approach. Applying the earning value approach. Intellectual property valuation.
11. Business evaluation development (practical work - 4 h)
Development of business evaluation. Methodology for determining the final valuation of a business. Preparation of the valuation conclusions and report. Calculation of premium and discount for control.

Requirements for awarding credit points

1. Presentation on the design, development and value of the selected brand (trade mark) (20%).
2. Independent work on valuation of the selected business (company), including characteristics of the business and industry, classifying factors influencing business value and developing future development strategy - business valuation report (50%).
3. Presentation of business valuation report (20%).
4. Activity in classes (10%).
At the end of the study course, a test with a mark consisting of a cumulative assessment of the learning outcomes (100%).

Description of the organization and tasks of students’ independent work

Getting ready for practical assignments and presentation of the selected brand. Individual assessment of the selected company by developing and presenting a complete business valuation report.

Criteria for Evaluating Learning Outcomes

All assignments shall be completed. Every assignments is graded. The evaluation of the study course depends on the evaluation of independent and practical assignments (tasks), 10% corresponds to one point on a 10-point assessment scale.

Compulsory reading

1. Damodaran A. Damodaran on Valuation. 2nd edition. USA: John Wiley &Sons, 2006. 696 p.
2. Finanšu vadības rokasgrāmata. Rīga: Dienas Bizness, 2004.
3. Kurjanovičs V. Biznesa novērtējums: metodika un organizācija. Rīga: Merkūrijs Info, 2010. 189 lpp.
4. Reilly F., Schweihs P. Handbook of Advanced Business Valuation. New York: McGraw-Hill, 2000. 512 p.
5. Uzņēmuma darbības novērtēšana. Rīga: SIA „Lietišķais informācijas dienests”, 2008. 179 lpp. Harvard Business Review.
6. Shanon P.P., Niculita A.V. Valuing the Business. 5th ed. USA: The McGraw-Hill, 2008. 1098 p.
7. Есипов В., Маховикова Г., Терехова В. Оценка бизнеса, 2-е изд. СПб.: Питер, 2006. 464 с.

Further reading

1. Baltruma D., Freibergs J. Nekustamā īpašuma vērtēšana. Rīga: Vieda, 1999. 99 lpp.
2. Freibergs J., Žuromskis V. Nekustāmā īpašuma vērtēšana (teorija un prakse). Rīga: SIA ,,Eiroeksperts”, 2013. 347 lpp.
3. Īpašuma vērtēšanas standarti; LVS 401-0:2002 L, VSIA ,,Latvijas standarts”, 2002. gada maijs.
4. Januška M. Firmas ekonomiskā stāvokļa analīzes metodika. Rīga: ZKC SIA „Inovācija”, 2002. 40 lpp.
5. Keith A., Allman K.A. Corporate Valuation Modeling: a Step-by-step Guide. N.J.: John Wiley, 2010. 304 p.
6. Koller T. Valuation: Measuring and Managing the Value of Companies. 6th edition. Hoboken, N.J.: John Wiley & Sons Inc., 2015. 825 p.
7. Vērtētāju ētikas kodekss. Rīga: Latvijas īpašumu vērtētāju asociācija, 2006.
8. Гукова А.В., Аникина И.Д. Оценка бизнеса для менеджеров: Учебное пособие для студентов обучающихся по специальности ,,Финансы и кредит”. Москва: Издательство ,,Омега-Л”, 2007. 176 с.
9. Коугленд Т., Коллер Т., Мудрин Дж. Стоимость компаний. Оценка и управление. Третье изд. Москва: Олимп-Бизнес, 2007. 554 с.
10. Щербаков В.А., Щербаков Н.А. Оценка стоимости предприятия (бизнеса). 2-е изд. Москва: Омега-Л, 2007. 288 с.

Periodicals and other sources

1. Business Week; nedēļas izdevums [tiešsaiste]. Bloomberg L.P. Businessweek ISSN 0007-7135. Pieejams:
2. Dienas Bizness: nedēļas laikraksts: Latvijas biznesa avīze. Rīga: Diena: Dagens Industri, 2005.
3. European Valuation Standards 2016 [tiešsaiste]. TEGoVA. Pieejams:
4. Financial Times: laikraksts [tiešsaiste]. England based finance newspaper. London: The Financial Times Ltd. Pieejams:
5. Forbes: žurnāls. Rīga: SK Media, 2010. ISSN 1691-6018.
6. International Valuation Standards 2017 [tiešsaiste]. International Valuation Standards Council. Pieejams:

7. Kapitāls / žurnāls lietišķiem cilvēkiem: krāsains biznesa un ekonomikas žurnāls. Rīga: Lietišķās informācijas dienests, 2005. ISSN 1407-2505.


Restricted elective study course for the specialisation direction “Financial Management and Accounting” of the academic Master study programme “Economics”; restricted elective study course in the professional Master study programme “Business Management”