11. March 2012 08:00
By Marcin Narloch
- Company is no longer a going concern: when the company is faced or expected to face a liquidation. In such situation cash flows will be most likely negative, as well as earnings. In such cases, assets minus liabilities = book value is best choice for analysis.
- Company is mostly run from liquid assets: banking, insurance or investment businesses, so that these assets can be easily calculated.
- Company experiencing negative or variable Earnings per Share (EPS): in such cases P/BV valuation is best suited because it will return a positive result.