Excerpt From A Prudential Report On Wal-Mart,

Solution Heuristic approach of valuation is sometimes good but sometimes a bad measure of valuation if we look at the good part, we can find that it is easy and efficient way for valuation. It helps for short term decision making. If we look at the wrong part we can find that its a rough estimate hence dont give a true picture of valuation. An investor should not completely rely on these valuations based on heuristic approach Do you think eBay is an anomalous case, and are there situations where the use of heuristics makes sense. Solution Yes e-Bay is a anomalous case, the main reason for using heuristic approach is to find out the value of the organization when it start its operation. Here heurists ratios like P/E ratio or book value ratios are use to estimate the current value of the company with the help of some similar company in the Industry. So some situations like P/E ratios, and other measures of multiple value helps the organization to have a clear picture of its. Is valuation part science and part art Solution Valuation is an art as well as science. Art guides the investors to find out the