Factors for Determining Corporate Value and Performance

Factors for Determining Corporate Value and Performance
Student's Name
Institution
Course
Professor's Name
Date
Factors for Determining Corporate Value and Performance
The primary objective of any business venture is to progress well and make a profit. Business entities need to constantly perform corporate valuation exercises to monitor their performance and use their findings to make crucial decisions affecting the business. Corporate valuation refers to determining the value of a business entity, while performance is related to how well the business entity carries out its mandate. The common tool used in business valuation and determining performance are the cash flows and income statements. Cash flow statements help assess the financial position of a business entity, while income statements tell how much revenue the business entity has attracted over a specified period.
Cash flow statements help determine a business entity's cash position, which is crucial in corporate valuation and performance rating. A cash flow statement is a financial document showing the effects of changes in income and balance sheet accounts on cash and cash equivalents. It also breaks down the analysis into investing, operating, and financing activities (Understanding cash flow analysis: Ag decision maker n.d). Cash flow only tracks the inflow and outflow of cash in a business firm.
Operating activities are the routine activities the business entity undertakes. They include manufacturing, selling, and transportation of goods to supply chains, wholesalers, or retailers in the case of tangible goods. In firms that deal with service provision, operating activities would include facilitating personnel offering the services. Operating activities represent cash outflow because the company finances activities that facilitate its routine operations, which often ensure the firm meets its objectives....