In the finance field, there are certain general levels of valuation for a business’s assets; they include; intrinsic value, liquidation value, book value, and market value. Each of these levels gives accountants and analysts a way to classify the average value of a company’s assets. Liquidation value would be the accumulated worth of a firm’s physical assets at the current market price if the company were to go out of business. Assets such as inventory,real estate,equipment, and fixtures determine the liquidation value of a business. Book value refers to the worth of a company as portrayed in its financial records(Seth, 2018). It shows the total value of an organization if they sell off all its assets and pay back all its liabilities. If the company went for liquidation, this is the amount that their investors and creditors would expect. Market value, on the other hand, is defined as the highest price at which a company’s security or asset can be sold or bought in the market(WallstreetMojo, 2018). It is a reflection of the company’s stock value in the market currently. Intrinsic value refers to the estimated cost of business, tangible and intangible factors included(Kenton, 2018). It is calculated through fundamental analysis, one of the factors considered when estimating the intrinsic value of assets in a company is the value of currency where the company is operating.
Saudi Arabia being an oil-rich nation has one of the largest oil companies globally by revenue. Aramco has been identified by financial analysts as the most profitable company worldwide, based on valuations applied. Therefore, the business leaders of Saudi need to ensure the valuations of the business remain positive for the nation to continue a giant in the world’s economy.
Kenton, W. (2018, July 26). Intrinsic Value. Retrieved from Investopedia: https://www.investopedia.com/terms/i/intrinsicvalue.asp
Seth, S. (2018, November 06). Market value versus book value. Retrieved from Investopedia: https://www.investopedia.com/articles/investing/110613/market-value-versus-book-value.asp
WallstreetMojo. (2018). Book Value Vs Market Value. Retrieved from WallstreetMojo: https://www.wallstreetmojo.com/book-value-vs-market-value/
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