Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/96227
Authors: 
Kedar-Levy, Haim
Year of Publication: 
2013
Citation: 
[Journal:] The Journal of Entrepreneurial Finance (JEF) [ISSN:] 1551-9570 [Volume:] 16 [Year:] 2013 [Issue:] 2 [Pages:] 57-74
Abstract: 
Pro forma estimation of financial statements often builds on constant ratios to sales revenue. While constant ratios may be relevant for established firms operating in predictable industries, they yield noninformative and possibly misleading information when applied to new firms, and particularly to technology ventures. Because new firms grow and change rapidly, a robust analysis should be based on intimate familiarity with the specific firm's business plan. This paper presents an alternative approach that links the firm's budget, as derived from its business plan, to pro forma financial statements, and to valuation models. The resulting estimated firm value is less sensitive to exogenous parameter assumptions than other methodologies.
Subjects: 
Valuation
Business plan
Entrepreneurship
Pro forma financial statements
JEL: 
G17
G32
L26
M13
Document Type: 
Article

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