METHODS FOR DETERMINING THE FAIR VALUE OF DISTRESSED COMPANY: THEORETICAL APPROACH AND PRACTICAL APPLICABILITY

Abstract

Researchers focusing on the application of a company’s fair value determination methods constantly strive to improve them. However, the methods of valuation mostly are applied to “healthy” companies that generate a positive financial result. So, there is still a lack of a methodology for valuing financially distressed companies. After the analysis and synthesis of the scientific literature on the topic of determining the fair value of financially distressed companies, the methodology for determining the fair value of distressed company was prepared on the example of UAB “Y”. It is based on the discounted cash flow model assuming the value of a company as a going concern and the probability of distress.