Valuation Glossary

Purchase price allocation (PPA) is the process of distributing the purchase price of an acquired company among its identifiable assets and liabilities based on their fair values at the acquisition date.

The purchase method, also known as the acquisition method, is an accounting approach used in business combinations when one company acquires another. This method requires the acquiring company to record the identifiable assets, liabilities, and any non-controlling interest of the acquired company at their fair values on the acquisition date. Any excess of the purchase price over the fair value of the net identifiable assets is recorded as goodwill.

Proportionate consolidation is an accounting method used to report the financial results of a joint venture. Under this method, a company includes its share of the joint venture’s assets, liabilities, income, and expenses in its financial statements.

Profitability ratios are financial metrics used to assess a company's ability to generate profit relative to its revenue, assets, or equity.

Corporate privatization is when a publicly traded company buys back all of its shares or is acquired by private investors or a private company, making it privately owned and delisting it from the stock exchange.