Definition
Valuation methods are the frameworks investors use to estimate intrinsic value from assets, earnings, cash flow, or comparable market prices.
Common methods
- Asset-based valuation
- Earnings power value
- Discounted cash flow
- Relative valuation using market multiples
Why it matters
Every valuation method depends on input quality. If earnings are distorted or weak-quality, an earnings-based valuation can produce a misleading result even when the math looks correct.
Where to apply it
Use valuation methods after checking Earnings Quality. Better inputs usually matter more than finer valuation precision.