The problem of accounting methods in company valuation

Abstract

Valuation of a company is not only a calculation but it represents complex set of processes which are mutually interconnected and which are more or less important in the process of company valuation in dependence of the value category inquired. One of these processes is the financial analysis which objective is not only to prove, subsequently the strategic analysis, going concern of a company, but its outcomes are the starting-point of financial plan preparation that is needed in order to apply incomebased methods of company valuation. It is generally accepted that results of financial ratios differ in implications of applied accounting methods. The objective of this paper is to frame an infl uence of accounting methods on the incomebased value of a company while the stress is put on the methods of inventory measurement in the context of both, in context of the Czech accounting law as well as of the International Financial Reporting Standards.