Is your core methodology rock-solid? The income approach is the most commonly used business valuation approach and has the most common errors found in its application. Experts Bethany Hearn and Sahan Totagamuwa highlight the challenges and nuances associated with income approach. Double check that you are not making the most commonly found errors, and learn tips to prevent these inaccuracies from finding their way into your valuations. Attend this session to ensure that methodology you depend on most is as dependable as it can be.

• Overview of Valuation Theory
  • Factors that impact value
  • Three approaches to valuation
    • Asset Approach
    • Income Approach
    • Market Approach
• Definitions and terminology
  • What is value?
  • Standards of value
  • Level of value
  • Premise of value
• Valuation Standards and Engagement Definition
  • AICPA
  • USPAP
  • ASA
  • Nature and risk of the engagement
• Engagement considerations and common general errors
  • Standard of value
  • Level of value
  • Valuation date
  • Valuation versus Calculation or Restricted Use
• Income Approach common errors
  • Overview of income approach
    • CCF
    • DCF
    • Cost of Capital
    • Weighted Average Cost of Capital
  • Historical normalizing adjustments
  • Forecasts
  • Converting income to cash flow
    • Direct equity
    • Invested capital
    • DCF specific
  • Capitalized cash flow method versus Discounted cash flow method
  • Cost of equity capital
  • Cost of debt
  • Weighted average cost of capital
  • Direct equity versus invested capital method
  • Non-operating assets and liabilities and excess working capital
  • Reporting requirements and errors
• Conclusion

• Describe the fundamental concepts of the income approach
• Identify the key nuances to applying the income approach
• Recognize common errors in the application of the income approach principles
• Improve their accuracy when using the income approach