Determining the Value of a Firm


  • Precha Thavikulwat


The value of a firm in computerized business gaming simulations can be determined through five different measures: book value, market value, capitalized value, deductive judgment, and adjusted net worth. The firm’s book value may be an unreasonable measure of its true value because of the idiosyncrasies of accounting. True market value may be unavailable or unreliable. The capitalized value measure requires an arbitrary parameter, the deductive judgment measure requires subjective judgment, and the adjusted net worth measure requires detailed knowledge of the gaming simulation’s model. Developers are in the best position to apply the adjusted net worth measure, so they should code it into their simulation’s computer programs.