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Valuation

Valuation is the process of evaluating the current price of an asset or a company. Valuation can be compared to the process of Due Diligence in which an analyst provides professional expertise on company’s managerial team, effectiveness of its business-model, the worth of current assets, its perspectives on the market, and appeal to the consumer. The valuation process is necessary in order to elicit the fair value of a security, or the price a consumer is willing to pay a supplier, assumed that both parties are entering the agreement on consensual basis.Professional expertise is important in determining if company or asset’s market value correlates to market realities, and in making forecasts about the prospects of future earnings.