Maritime Investment Appraisal and Budgeting

Abstract

This chapter presents the basic principles of vessel valuation. First, we illustrate the market approach ("mark-to-market"). Second, we present the Long Term Asset Value (LTAV) method as an example for the DCF-approach ("mark-to-model"). Third, we discuss necessary conditions for the equivalence of market prices and fundamental values of vessels. Finally, we compare the valuation levels of listed shipping companies and other commonly used financial ratios with a matched sample of manufacturing firms.