Abstract:
The markets have become global and the various financial centers and
major banks start permanently in a competitive process without precedent.
These developments have led to the emergence and expansion of financial
assets, whose use requires additional competence and guidance. Their use
can not be conceived without a real support in assessment, to provide their
fair value as determined by the most appropriate method, with information
from specialized markets. Financial valuation model of Feltham-Ohlson is
considered a tool to study financial markets, used by practitioners for the
analysis and the ability to guide accounting and financial options or the ones
related to managerial decisions. The model has essentially an accounting
content, based on anticipation of future dividends. Feltham and Ohlson
propose an innovative approach of the valuation of the enterprise by linking
market value of equity to its accounting value, which is added to an updated
value of future "abnormal" earnings. Linear information model (LIM)
represents the estimated part of the value of the enterprise, taking into
consideration the precautionary principle attached to the value of accounting
results. Relevancy of the company's financial position is judged by the
strength of financial assets and the operating assets to generate future cashflows. Operating assets are able to emit a return higher than originally
anticipated and that is what the authors qualify as a residual result.
