Marketability is described as ''the capacity to swiftly convert the property to cash using the minimal cost possible'' according to the International Glossary of Business Valuation Terms (Engineering/valuation program DLOM Team, 2009). There are numerous factors which affect marketability. In this essay, some of the factors will be stated and explained further on how they impact marketability.
Nature of the cooperation, its history, its position in the industry, and its economic outlook is one of the factors which influence marketability (Engineering/valuation program DLOM Team, 2009). It is an advantage if the company has a well-traced history because when the history is good, the property will have high value. Additionally, a good position and enough resources for the company will produce high chances of good cash flow.
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Moreover, the other factor is the cooperation redemption policy (Engineering/valuation program DLOM Team, 2009). This is another factor which affects marketability as it helps define the fair market value of estates tax purposes. If the redemption is good, then it will generate capital in the cooperation, but if it is bad, then the company loses.
Additionally, the Cooperation history of paying dividends is another factor which impacts on marketability (Engineering/valuation program DLOM Team, 2009). If the company has a good history of paying a dividend at the right time, then it has a good value. Moreover, delaying to pay the dividends or poorly paying them shows that the company has a very low value.
Analysing the cooperation financial statement is also crucial factor (Shafi, 2014). The good a financial statement is, the higher the value of the business. If the company had some problems with its finance, then it is hard for the firm to have a good market value and stay longer in the market.
Furthermore, cooperation’s management is another crucial factor affecting marketability (Shafi, 2014). If a company has poor management, then chances are that it will perform poorly in the market. Additionally, it will mean that the company has no good resources or lacks order on how it should operate. Furthermore, due to the poor management, the value of the business will be little.
The period at which the stocker must hold to realise some profit should also be considered as it affects marketability (Engineering/valuation program DLOM Team, 7). If it will take much time for the stocker to realize profits, then the business valuation is low. The higher the profit, then the higher the value of the business.
Lastly, the value of the subject cooperation traded stocks should be analysed (Shafi, 2014). The stock trade determines what value the cooperation will have. The stocks determine the discount produced. The higher the traded stock then, the higher the discount.
References
Engineering/valuation program DLOM Team. (2009). Discount for Lack of Marketability: job Aid for IRS Valuation Professionals. DLOM Job Aid . 7-11.
Shafi, M. (2014). Determinants Influencing Individual Investor Behaviour in Stock Market: A cross Country Research Survey. Arabian Journal of Business Management Review (Nigerian chapter), 2 (1), 60-71. 2014.
