Intrinsic value

In the intrinsic value method, the value of equity is determined as the difference between the net assets (tangible and financial fixed assets and net working capital) and the net debts.

The balance sheet as at valuation date is used as a starting point, corrected for any hidden reserves (for example by using current appraisal values ​​for tangible fixed assets).

This methodology is normally used with some restraint, as growth expectations are not or not explicitly expressed in this methodology. Future cash flows are not made transparent.

The intrinsic value method is often applied to real estate companies or holding companies that do not undertake any operational activities themselves.

This valuation method is one of the 6 valuation methods in the Valid Value model.