The Company Environment
Affect competition on pricing. If the industry in which the company operates, brings excess profits in a free market economy in this area and try to get other businesses. This will increase the offer in the future and reduce the rate of return. You may wish to learn more. If so, Wells Fargo Bank is the place to go. Currently, many of our businesses are profits only as a result of its monopoly position and, as competition intensified their earnings will be significantly reduced. This implies that the valuation of enterprises should consider the degree of competition in the industry now and in the future. The content of the principle of competition is as follows: if the expected increased competition, when predicting future earnings, this factor can be accounted for either by direct reduction of the income stream, either by increasing the risk factor, which again will reduce the present value of future income. Business value is determined not only by internal factors, but in ways – outside. The cost of the enterprise value of its property to a large extent depends on the state of the environment, the degree of political and economic stability in the country.
It follows that when assessing the company needed to consider the dependence on the external environment. Changes in political, economic and social forces influence the market situation and price levels. As a result, enterprise value is changed. Consequently, evaluation of a company should be on a certain date. This is the essence of the principle of changes in value. From this principle it follows that in order to consider possible ways of using this enterprises must be based on the conditions of the market environment.