Steps to Determine Equity in an Enterprise

13:53, 11/07/2024

In 2017, Circular 122/2017/TT-BTC was issued by the Ministry of Finance regarding Vietnam Valuation Standards No. 12.

According to the new regulations, determining the equity capital in an enterprise involves 04 steps, specifically:

- Step 1: Forecast the dividend stream of the enterprise to be appraised. For enterprises with sustainable growth, the usual forecasting period is 05 years. For newly established enterprises or those experiencing rapid growth, the forecasting period may extend beyond 05 years or even longer. For enterprises operating with a defined time frame, the dividend stream forecasting period is determined according to the enterprise's lifespan.- Step 2: Estimate the cost of using equity capital.- Step 3: Estimate the equity capital value at the end of the forecasting period.- Step 4: Estimate the equity capital value of the enterprise to be appraised.

More details can be found in Circular 122/2017/TT-BTC effective from January 01, 2018.

- Thanh Lam -

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