Valuation Day 2024: The Importance of Assets Valuation In Financial Stability

ESV Sunday Alaino,

Valuation Day is marked out every year by the Nigerian Institution of Estate Surveyors and Valuers, precisely every 5th day of May to celebrate and to enlighten the public in creating awareness about valuation and also making the public know that valuing assets helps in investment decision and policy making and ensuring accurate financial statement, facilitates loan acquisition and ensuring adequate insurance coverage.

Assets Valuation is the process of determining the fair market value of an asset. It often consists of both subjective and objective measurement. Asset Valuation normally is carried out for different purposes like, mortgage, insurance, compensation, merger, probate, sale, purchase etc.

The Estate Surveyor and Valuer is the one authorized by law in Nigeria to carryout and to determine the worth of an asset by virtue of his training and experience. He is the only one eligible as a professional to append a value to a property.

Assets Valuation is very key to financial institution and the process of the asset valuation is complex and requires the consideration of various factors. The value of an asset is often influenced by market conditions, economic conditions, legal and regulatory framework, assets condition, type of asset and valuation method.

Assets Valuation allows businesses to have a clear understanding of their financial position, make informed decisions and comply with accounting standards. It is so essentials that it provides a realistic view of the value of the assets owned by a company for various purposes such as financial reporting, mergers and acquisitions, tax planning(maximizes tax liabilities/compliance with tax regulations) and obtaining financing.

Continuous engagement of Estate Surveyors and Valuers in carrying out assets valuation helps in providing a comprehensive assessment of your assets such as landed properties, plant and machinery, motor vehicles and furniture, fittings and equipments, taking into account not only the current market value of your assets but also other factors such as depreciation, maintenance cost and the current condition of your assets. This will go a long way as it will help you to make informed decision about your assets whether to repair or replace them at every point in time to invest further and plan further. It is important you know the value of your assets because it will help you to plan for further investments decisions.

Assets Valuation implies deciding the monetary worth of an asset, as the right benefit and loss of any investment cannot be determined without it. Hence, its importance in financial stability cannot be over-emphasized. Assets valuation helps businesses understand the worth of their assets and make informed decision. For example, if a business needs to sell its machinery, it needs to know the fair market value of the machinery to get the best price. It involves assessing various factors such as market conditions, market comparables, dynamic economy of demand and supply, characteristics of the asset and income generation potential. It is however a stabilizer of the economy.

ESV Sunday Alaino, a registered Estate Surveyor and Valuer write from Asaba, Delta State.