Asset Valuation

DEFINITION of 'Asset Valuation'

A method of assessing the worth of a company, real property, security, antique or other item of worth. Asset valuation is commonly performed prior to the sale of an asset or prior to purchasing insurance for an asset.

BREAKING DOWN 'Asset Valuation'

Asset valuation may consist of both subjective and objective measurements. For example, in valuing a company, there is no number on the company's financial statements that tells how much its brand name is worth; this aspect of asset valuation must be subjective. On the other hand, net profit is an objective measurement based on the company's income and expense figures.

Common methods for determining an asset's value include comparing it to similar assets and evaluating its cash flow potential. Acquisition cost, replacement cost and deprival value are also methods of asset valuation.

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