Glossary
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M
Majority Control
The degree of control provided by a majority position.
Majority Interest
An ownership interest greater than 50% of the voting interest in a business enterprise.
Market Approach
A valuation approach which provides an indication of value by comparing the subject asset with identical or similar assets for which price information is available.
Market Participants
The whole body of individuals, companies or other entities that are involved in actual transactions or who are contemplating entering into a transaction for a particular type of asset.
Market Rent
The estimated amount for which a property would be leased on the valuation date between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.
Market Risk
Risk that affects an entire market and not just specific participants or assets. Market Risk cannot be diversified.
— SEE also: Business Risk; Financial Risk; Systematic Risk; Systemic Risk; Unsystematic Risk
Market Value
The estimated amount for which an asset or liability should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.
Minority Discount
A discount for lack of control applicable to a minority interest.
Minority Interest
An ownership interest less than 50% of the voting interest in a business enterprise.
Modern Equivalent Asset
An asset which provides similar function and equivalent utility to the asset being valued, but which is of a current design and constructed or made using current materials and techniques.
Multi-Period Excess Earnings Method
A method of estimating the economic benefits of an intangible asset over multiple time periods by identifying the cash flows associated with the use of the asset and deducting a periodic charge reflecting a fair return for the use of contributory assets.
— SEE also: Contributory Assets; Contributory Asset Charges; Excess Earnings Method; Greenfield Method
N
Net Book Value
(1) In relation to a business enterprise: The difference between total assets (net of accumulated depreciation, depletion, and amortization) and total liabilities as they appear on the balance sheet.
(2)
In relation to a specific asset: The capitalized cost less accumulated amortization or depreciation as it appears on the books of account of the business enterprise.
— SEE also: Book Value; Carrying Amount
Net Present Value
The value, as of a specified date, of future cash inflows less all cash outflows (including the cost of investment) calculated using an appropriate discount rate.
— SEE: Present Value
Nominal Cash Flows
Cash flows over a period with no adjustment for inflation.
Non-Current Assets
Assets that are held long term and intended for use by an enterprise in the production of goods or the delivery of services.
— SEE also: Current Assets
Non-operating Assets
Classes of assets that are not essential to the operations of a business, but may still generate income or provide return on investment.
Normalised Earnings
Economic benefits adjusted for non-recurring, non-economic, or other unusual items to facilitate comparisons.
O
Obsolescence
A loss of utility of an asset caused by either physical deterioration, changes in technology, patterns of demand or environmental changes that results in a loss of value.
— SEE also: Economic Obsolescence; External Obsolescence; Functional Obsolescence; Physical Obsolescence
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