Oceňování 2021, 14(3):21-36 | DOI: 10.18267/j.ocenovani.264

Analysis and evaluation of the approach to the cost of capital and capital structure in the Czech expert opinions on the business valuation - Part 2

Pavla Maříková¹, Milan Dlabaja²

¹ Doc. Ing. Pavla Maříková, CSc., Katedra financí a oceňování podniku VŠE Praha

² Bc. Milan Dlabaja, student Fakulty financí a účetnictví VŠE Praha

The aim of the second part of the article is to verify on a sample of published expert opinions how large errors may occur due to an incorrectly determined capital structure or the use of an inappropriate reagental function in a discount rate. The analysis in the examined sample showed a percentage error in the net value from the main operation from - 59% to + 32%, for remote results even up to + 298%. It turned out that the error is large even with the correct tuning of the capital structure, if an inappropriate reagent function is used to recalculate the cost of equity. The largest range of errors was based on assessments with an inappropriate reagental function and at the same time the target capital structure. The DCF equity method more often led to an underestimation of the resulting valuation and showed a higher average and median error than DCF entities. However, the DCF entity method had a wider range of errors found.

Keywords: value, business valuation, capital cost, capital structure, regental function, discount rate, iterations

Grants and funding:

Článek je zpracován jako jeden z výstupů výzkumného projektu Fakulty financí a účetnictví VŠE Praha, který je realizován v rámci institucionální podpory VŠE IP100040. Podkladem k článku je diplomová práce Bc. Milana Dlabaji, vedená doc. Pavlou Maříkovou, obhájená na Katedře financí a oceňování podniku VŠE Praha v červnu 2021

JEL classification: G32

Published: November 4, 2021  Show citation