Leverage Buyout/“Ability to Pay” Analysis (LBO): in this case, the company is valued based on assumptions of company purchase through a leveraged buyout. This again utilizes the money that was borrowed during the acquisition of the company as well as considering the rates of return (Michael, 2012).
Comparable Company Analysis (Public Comps): this is the estimation of the metrics or the terms that the other companies are using I valuing products. This requires a lot of market skimming to be as accurate as possible. In this, the various pricing mechanisms are key in coming up with the right techniques to establish a competitive advantage of similar companies (Kiplinger’s Personal Finance, 2006).
Precedent Transaction Analysis (M &. A Comps): this is the reviewing of the past values and prices that were done by the previous similar companies. This gives room for a company to come up with several value multiples.
1. The paper has therefore chosen to discuss on the 3 companies: A &. K Company, Toyland Company, and Ramatex Company. One factor that is worth noting in each company is that A &. K is the company that negative earnings Toyland company whose earnings or revenues are expected to grow more than 50% over the near future while .Ramatex is the non-U.S. company. The factors below can, therefore, be used for the explanations on the possible reasons why a company can have negative earnings in a financial year or accounting period. They could be temporary or long-term problems (Ruth and Halperin, 2000).
The temporary or short term problems in a firm can be as discussed. These could be problems that are either internal or triggered by external forces too. In this context, some of the factors can be strikes that are done by the employees in a firm.