BV202-OOO - Introduction to Business Valuation - Income Approach
Category: Business Valuation
Continuing Education: 28.8
Registration
Please see the "Upcoming Classes" tab for class offerings and registration information.
Course Description
BV202
was designed to build upon the learning outcomes achieved in BV 201 by adding
the income approach to the student's skill set/ toolbox. This course places heavy emphasis on the three key variables
of a valuation (regardless of whether the valuation is concerning fair value for financial
reporting, fair market value for litigation or tax-related valuations):
- Benefit Streams;
- Risks (i.e., discount rate);
and
- Growth.
Students will be provided with the core concepts necessary for them to
immediately apply the income approach without regard to the specific standard of
value or purpose for the valuation.
Instructional Methods
Methods
include lectures, discussions and individual/ group exercises
and assignments. Laptops or mobile devices are necessary for this
course as you will receive eHandouts throughout the class.
Course Audience
BV202 is one of four Principles of Valuation
(POV) courses required for those seeking a credential with ASA. In
addition, this course is also of interest to accountants, attorneys, business
brokers, investment bankers, Internal Revenue Service staff and the appraisal
community at large who are involved or interested in the valuation of
businesses.
NASBA and Continuing Professional Education (CPE) Credit
The American Society of Appraisers is registered with the National
Association of State Boards of Accountancy (NASBA) as a sponsor of continuing
professional education on the National Registry of CPE Sponsors. State
boards of accountancy have the final authority on the acceptance of individual
courses for CPE credit. Complaints regarding registered sponsors may be
submitted to the National Registry of CPE Sponsors through its website www.learningmarket.org.
CPE Credit: Up to thirty (30) CPE credits in Specialized
Knowledge
Program Level: Fundamental
Delivery Method: Only group-live
courses are approved for CPE
Prerequisites: None
Advanced Preparation:
None
Policies: ASA's
Refund and Cancellation Policy and ASA's Complaint Resolution
Policy
No prerequisites for this course.
Agenda
Times subject to change per class/offering
Day 1 - Morning
8:00-8:45 Teacher and student introductions
8:45-9:00
Course Introduction
9:00-9:15 Chapter 1: Introduction to BV 202
9:15-9:45
Chapter 2: Overview of Income Approach
9:45-10:15 Chapter 3: Economic
Benefits
10:15-10:30 Break
10:30-12:00 Chapter 3: Economic Benefits
(continued)
12:00-1:15
Lunch
Afternoon
1:15-3:15 Chapter 4: Forecasting Financial
Statements
3:15-3:30 Break
3:30-5:30 Chapter 4: Forecasting Financial
Statements (continued)
Day 2 - Morning
8:00-9:15 Chapter 5: Capitalization of
Benefits Method
9:15-10:15 Chapter 6: Discounted Future Benefits
Method
10:15-10:30 Break
10:30-11:30 Chapter 6: Discounted Future Benefits
Method (continued)
11:30-12:00 Chapter 7: Introduction to Discount
Rates
12:00-1:15 Lunch
Afternoon
1:15-3:15 Chapter 8: Developing the Equity
Discount Rate
3:15-3:30 Break
3:30-5:30 Chapter 8: Developing the Equity
Discount Rate (continued)
Day 3 - Morning
8:00-9:45 Chapter 9: The Capital Asset
Pricing Model
9:45-10:15 Chapter 10: Weighted Average Cost of
Capital
10:15-10:30 Break
10:30-12:00 Chapter 10: Weighted Average Cost of
Capital (continued)
12:00-1:15 Lunch
Afternoon
1:15-2:45 Chapter 10: Weighted Average Cost of
Capital (continued)
2:45-3:15 Chapter 11 – Pulling it All
Together
3:15-3:30 Break
3:30-4:00 Chapter 12: The Levels of
Value
4:00-5:30 Course review
Day 4 - Morning
8:00-11:00 Exam
Learning Outcomes
Upon completion of this course,
students will be able to:
- Assess the applicability of different Income Approach
methods to a specific assignment;
- Define, explain, and assess the applicability of alternative benefit
streams;
- Determine and make necessary normalization and control adjustments to
financial statements;
- Evaluate management projections; perform independent financial projections
if necessary;
- Differentiate and apply the capitalization of benefits and discounted
future benefits methods of valuation under the income approach;
- Develop equity and invested capital discount rates;
- Apply and reconcile the results of the build-up and modified capital asset
pricing models;
- Develop estimates of the risk free rate, the equity risk premium, beta,
the industry risk premium, and the size premium from recognized sources;
- Identify and evaluate unsystematic risk (company specific risk);
- Summarize the derivation and use of data from Morningstar’s Stocks, Bonds,
Bills, and Inflation and the Duff & Phelps Risk Premium Report;
- Discuss controversies involved in key discount rate components, the equity
risk premium and the company specific risk premium;
- Identify the principles behind an asset approach;
- Describe circumstances where the application of and reliance on the asset
approach might be appropriate;
- List the hierarchy of assets and returns on those assets;
- Apply asset approach valuation methods;
- Explain the concepts behind the excess earnings model and their relevance
to specific valuation assignments;
- Communicate the difference between the traditional excess earnings method
and the multiple period excess earnings method related to valuing intangibles;
- Perform an asset approach valuation using the net asset value with the
excess earnings method; and
- Determine the level of value resulting from the use of each income method
and each asset method.