The Valuation of 
                  The Valuation of 
                  Long-Term Securities
                  Long-Term Securities
           DDiissttinctioinctions ns AmAmoongng V Valualuaatition on 
               CCooncencepptsts
           BBoondnd V Valualuaatitionon
           PrPrefereferreredd Sto Stocck Vk Valualuaatitionon
           CCoommmonmon Sto Stocck Vk Valualuaatitionon
           RRatesates  of Return (oof Return (orr  YYieldieldss))
    4.3            Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
                  Price,Value,and Worth
         Price:What you pay for something
         Value:The theoretical maximum 
            price you could pay for something
         Worth:The maximum amount you 
            are willing to pay for a purchase
    4.4            Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
                   Liquidation Value
                   Liquidation Value
      ••  LLiiqquuiiddaattiioonn  vvalaluue e rreepprresesenenttss  tthhee  
          amamoouunntt  ooff  mmoonneey y tthhaatt  ccoouulldd  bbe e 
          rreealaliizzeedd  iiff  aann  aasssseett  oorr  ggrroouupp  ooff  
          asasssetets s iis s ssoolldd  ssepepararaatteellyy  ffrroomm  iitts s 
          ooppereraattiinngg  oorrggaanniizazattiioonn..
     4.5            Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
                  Going-Concern Value
        Going-concern value represents 
        the amount a firm could be sold 
        for as a continuing operating 
        business.
    4.6            Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.
                  Book and Firm Value
                   Book and Firm Value
     ••  BooBook vk valuealue  rreeprpreesesenntsts  eeithitheerr: : 
          (1(1))  anan  aasssseet vt valualuee::  tthehe a accccounountinting g 
                 vvalualue oe of anf an as asssetet  –– th thee  aassssetet’’ss  
                 ccosost mt minuinus itss its a accccumumuulatlateded  
                 dedepprreeciatciationion; ; 
          (2(2) ) aa fir firmm v valualuee::  ttototaal l aasssseetsts m minusinus  
                 liliaabbiilitlitiieess  aandnd  pprreefeferrrreed sd stotockck as as  
                 lilisstteded on t on thehe bala balancncee  ssheheeet.t.
     4.7            Van Horne and Wachowicz, Fundamentals of Financial Management, 13th edition. © Pearson Education Limited 2009. Created by Gregory Kuhlemeyer.