qwertyuiopasdfghjklzxcvbnmqw ertyuiopasdfghjklzxcvbnmqwert yuiopasdfghjklzxcvbnmqwertyui opasdfghjklzxcvbnmqwertyuiopa Role of CMAs sdfghjklzxcvbnmqwertyuiopasdf in Business ghjklzxcvbnmqwertyuiopasdfghj Valuation klzxcvbnmqwertyuiopasdfghjklz Submitted To, xcvbnmqwertyuiopasdfghjklzxcv Prof.

Ritu Wadhwa Maam bnmqwertyuiopasdfghjklzxcvbn Submitted By, Group 8 mqwertyuiopasdfghjklzxcvbnmq Barkha Adhikari (12) Dipendra Raj Tomar (15) Harshita Shukla (18) wertyuiopasdfghjklzxcvbnmqwe Kapil Agrawal (21) Pranee Mittal (33) rtyuiopasdfghjklzxcvbnmqwerty Richa Pandey (38) uiopasdfghjklzxcvbnmqwertyuio pasdfghjklzxcvbnmqwertyuiopas dfghjklzxcvbnmqwertyuiopasdfg

Introduction
In the accounting industry, two common career fields exist: financial and management. Where financial accounting is the professional field known for audits and taxation services, management accounting focuses more on the internal financial transaction of a company. A certified management accountant (CMA) primarily works directly for a company, recording and reporting transactions for internal review by business owners and managers. Most accountants in this industry work in a management accounting profession, as businesses need individuals with the technical knowledge of financial figures to help run organizations. The accounting profession has undergone significant changes in the past few decades. Rather than being simply a number cruncher, accountant now provide valuable services to companies regarding business decisions. This change has led to the importance of the certified management accountant certification, which provides accountants with a more well-rounded knowledge of business. In this project, we have reviewed articles from the journal The Management Accountant December issue which highlights the role of CMAs in business valuation process. For better understanding, every member of the group has reviewed one article.

Role of CMAs in adapting different methods in Business Valuation Process. Palash Garani (faculty of Maulana Azad college, Kolkata)
Reviewed by : Richa Pandey This article talks about the role of cost and management accountants in business valuation by using different methods of valuation. Business valuation is a process and a set of procedure used to determine the economic value of an owners interest in a business. CMAs role in business valuation is to help identify an appropriate valuation assortment. CMAs do so as a service to business owner, as a part of overall evaluation of business. Tools to value a business enterprise: Asset approach Market approach Income approach

Different methods of valuation are : Valuation by direct capitalization This approach is used in the companies which are listed in the stock exchanges. From the balance sheet of the company total tangible assets are subtracted from total liabilities to obtain net tangible assets. Discounted cash flow valuation Here the value of business is fixed by computing net present value of business with the help of capital budgeting methods. In this method income and cost are forecasted .After this the present value of future cash flows is computed. In the final step net present value is calculated by subtracting present value of cash outflows from the inflows.

Role of CMA in the context of different aspects of Business Valuation Valuation of brands

CMAs apply certain methodologies for this. 1. Discounted rate - in this method a CMA determines present value of historic investments in marketing and promotion, present value of price premium, present value of extra volume due to the brand. 2. Franchise valuation method - here the cost of franchisee is determined along with its setup cost and advertisement cost. 3. Excess earning method - in this method CMAs should try to assess the increase in profit attributable to the brand. Intellectual property valuation

The intangible assets include goodwill, trademark, technology, knowhow, trade secrets. It is done through three approaches cost based approach, market based approach, income based approach. 1. 2. Valuation in case of Mergers & Acquisition (M&A) Price earnings ratio Replacement ratio.

Conclusion drawn from the article To conclude, a valuation provides the foundation for skilled business appraisers to estimate what your business is worth. Valuation is frequently used in setting a price for an enterprise that is being bought or sold. Lastly, a valuation is often required under a variety of accounting and tax regulations. Hence, there are many important reasons that business owners should know the value of their businesses long before they decided to sell. It is because of this reason that the role of cost and management accountants (CMAs) is very important in determining the value of business. The basic theme of CMA is moving away from simple measurement and supply of information to management of processes and creation of value by deploying the information itself. The role of CMA in business is very vital. In fact, the reports of this valuation are prepared by the CMAs and the information is a major input to the investors. The CMAs use various techniques to assess the valuation of business. This article covers almost each process adopted by the CMAs in business valuation and it also provides a brief understanding of these concepts.

Role of CMAs in Business Valuation Vinay Tandon B.Sc., PGDCA, PGDBA, FICWA, MIIA (USA)

Reviewed By: Harshita Shukla Mr. Tandon has defined Business as the state of being busy in doing commercially viable and profitable work in context of an individual as well as society. According to him, Business is the social science of managing people to organize and maintain collective productivity toward accomplishing particular goal. Valuation means the act or process of assessing value or price of both tangible and intangible assets. It is a process and set of procedures used to estimate the economic value of an owners interest in his/her business. He opines that in the era of economic liberalization, companies are relying on capital market, acquisitions, and strategic alliances. In such a scenario it is important to answer the question How should the value of a company or a unit or a division of a company be appraised? Goal of such appraisal is to estimate the fair market value of a company i.e. the price at which property would change hands between a buyer and seller. A typical business valuation starts with description of national, regional and local economic conditions followed by the industrial conditions. Reason and circumstances surrounding business valuation are stated which are known as business value standard. It is the hypothetical conditions under which the business will be valued.

Need for Valuation He finds following to be the major reasons why valuation is needed: Buy/Sell agreements Retirement of partner/ Dissolution of partnership Succession planning Ownership Disputes Mergers and acquisitions Restructuring the business Investment decisions Wealth planning Tax planning Applying for loan Filing for bankruptcy

Engagement of professional accountants and skill required Professional accountant estimates the value of business, tangible and intangible assets along with its liabilities, intellectual property, and securities such as debt, equity and derivatives. Before engaging any accountant following things are taken under consideration Whether the Accountant is having sufficient resources to perform Whether he is having any conflict of interest with organization Knowledge of taxation aspect Knowledge of accounting standards

Understanding of employee performance measurement criteria in case of valuation for stock options

Methods of Business Valuation According to him, the financial statement analysis generally involves ratio analysis, trend analysis and industry comparative analysis. By comparing a companys financial statement of different time periods, the valuation expert can value growth or decline in revenues or expenses, change in capital structure or financial trends. Comparison with industry helps in risk assessment and ultimately in determining the discount rate. For analyzing, normalization of financial statements may be required. This falls into four category Comparability adjustments Non-operating adjustments Non-recurring adjustments Discretionary adjustments

Methods include the following concepts Discounted Cash Flow Method Net Asset Value Method (Balance Sheet Method) Market Multiple Method Liquidation Value Dividend Capitalization Method

Role of CMAs He is of opinion that when CMAs enter into accounting career they have an option to move into auditing, taxation, transaction or advisory services. They have the role of information managers in a market where distribution of information is asymmetrical. Business Valuation falls under the subset of transaction advisory which focuses on financial health of a company. They assist the individuals and corporations by calculating the net worth of their business that in turn helps them in making informed decisions.

It also helps in cutting costs and generating profits from the sale or purchase of any property or other tangible assets. They also create financial models and reports that outline clients tax and regulatory compliance activities. Comments: The article clarifies the basics of business valuation and its importance in todays world as well as it also highlights the role of CMAs in the field. The article is unique in itself as it provides a rare combination of simplicity and exclusivity. On one hand it touches the very basic concept of business and valuation and on the other hand discusses complex issue like methods of valuation with same ease and flow. The role of CMAs could have been described at a greater length but at the same time article do informs about all the major functions of CMAs.

Role of Management Accountants in Valuing Business Arindam Ghosh Asit Gope Reader and Head, Department of Commerce, Panihati College Life Member, Indian Economic Association & Bengal Economic Association Research Scholar, Department of Commerce, University of Kalyani
Reviewed By: Pranee Mittal Business valuation is a process or a set of procedures that is used to estimate the economic value of the owner's interest in a business. Valuation is used by financial market participants to determine the price they are willing to pay or receive to consummate a sale of a business. A valuation may be used for a wide range of purposes. These are listed as follows: From the buyer's point of view, the valuation tells him the price he should pay. From the seller's point of view, the valuation will tell him the lowest price at which he should be prepared to sell.

In case of listed companies: Valuation is useful to compare the value obtained with the share's price on the stock market and to decide whether to sell, buy or hold the shares. Valuation of several companies may be used to make portfolio decision. A Business Valuator uses a variety of business valuation methods to determine a fair price for business, such as: Asset-Based Approach, Income/Earning-Based Approaches, Market Valuation Approaches.

The role of managerial accounting is to increase knowledge within an organization and reduce the risk associated with making decisions. Accountants prepare reports on the cost of producing goods, expenditures related to employee training programs, and the cost of marketing programs, among other activities. These reports are used by managers to measure the difference, or variance, between what they planned and what they actually accomplished, or to compare performance to other benchmarks. However, the role of a management accountant in valuing business is manifold. These can be summarized as: Role as a Business Strategy Analyst As a business analyst a management accountant role is to identify key valuedrivers and business risk, then assess the businesss profit potential at a qualitative level. Value drivers are those economic activities that have the potential of generating future cash flows to the company. The ultimate aim of business analysis is to enhance business decisions. The management accountant as a financial analyst makes sound assumptions in forecasting a companys future performance. Role as an Accounting Analyst Accounting analysis is performed to determine the degree to which a companys accounting information system captures the business reality of the company that we are analyzing. The CMA role is to identify those places where there is flexibility in treating a particular item and appraise its appropriatenesstaking into account the firms unique or specific circumstance. Role as a Financial Analyst As s Financial Analyst a Management Accountant role is to use current and past financial data to assess a firms ability to maintain and sustain her financial stand. Role as a Prospective Analyst As a Prospective Analyst, the management accountant focuses on forecasting a firms future typically earnings, cash flow or both. Prospective analysis drawn on the findings from: accounting analysis, financial analysis, strategic and business environment analysis. The output here forms the basis of estimating company value. Valuation is an important consideration, but the decision makers should also

consider the structural fairness of the transaction and other factors. A fairness conclusion rendered to the board of directors should weigh the overall impact of a transaction on shareholders. An analyst rendering a fairness opinion should recognize that shareholders are the ultimate beneficiaries of the fairness conclusion and that the shareholders will be considering the fairness opinion in arriving at their transaction decisions. The CAPM is widely accepted for financial analysis, portfolio management, corporate planning, and other applications. However, its reliability in calculating the appropriate discount rate for an individual company is subject to question. Significant advance automating routine transaction-related accounting tasks, combined with a strong corporate emphasis value creation have signaled new directions in managerial accounting.