This article presents a new methodology for valuing a business and company value. Below we discuss aspects of the new methodology in detail.

There are two main parameters in the evaluation of a business and the capitalization of a company: financial flows and discount rates, since the value of any asset is equal to the sum of the discounted income generated by this asset.

When collecting data on financial flows, several questions arise: 1) for what period are incomes taken into account, 2) what incomes are taken into account. The answers are as following:

1) Data is required for the entire period of the company’s existence, or from the moment of its IPO.

2) Income can be calculated by stock quotes (with taking into account their number, if it changes), or by EBIT(DA), or by a more complex formula that takes into account a number of additional parameters.

One of the difference from Brusov-Filatova (BF) ( Brusov & Filatova, 2025 ) case is that the data on financial flows are collected for the entire period of the company’s existence, or from the moment of its IPO, and not just for the year of valuation.

To find the discount rate and its dependence on time within the framework of the BFO theory, it is necessary to know the parameter k₀ (the value of equity capital and WACC at zero leverage). It is determined as follows:

1) The following data from the company’s reporting for the year preceding the year of assessment are collected:

$\text{μ};L;k_d;t$.

Here μ is company yield; L is leverage level; $k_d$ is cost of debt and t is tax on profit.

2) If μ > 0 μ should be cleaned from leverage, by using Modigliani-Miller (MM) formula for cost of equity:

$\text{μ}=k_0+L\left(k_0-k_d\right)\left(1-t\right)$

$k_0=\frac{{\text{μ}}_i+L{k}_d\left(1-t\right)}{1+L\left(1-t\right)}$

(2a) If for the year preceding the year of assessment μ < 0, then it is necessary to shift to the year in which the yield μ > 0. There is alternative method by A. Brusova (2011) , which allows to find k₀ at any yield.

Unlike the BF case ( Brusov & Filatova, 2025 ), the data on the discount rate WACC(n) (and its dependence on company age n) are used for the entire period of existence of the company or from the moment of its IPO (in one-year increments), and not only for the year of assessment.

A more detailed accounting of data on financial income flows CF and the discount rate WACC(n) for the entire period of the company’s existence or from the moment of its IPO (in increments of one year), and not only for the year of valuation, allows us to more accurately take into account the influence of the retrospective period (which was taken into account within the framework of the BF consideration ( Brusov & Filatova, 2025 ), but less accurately) and more accurately assess the business and capitalization of the company.

We consider three time periods (see Figure 1 ):

1) retrospective period (from the moment of creation (entering the market) of the company until the moment of evaluation (n₁));

2) representative period (from the moment of assessment (n₁) to the end of this period (n₂): usually 5 - 10 years);

3) terminate period (finite (until moment (n₃), or infinite): in the first case, the BFO theory is used; in the second case, its perpetuity limits the MM theory).

To calculate the capitalization of company V it is necessary:

1) Collect and process company data (links to websites) for the entire period of the company’s existence or from the moment of its IPO (in increments of one year):

a) CF for each year (few methods):

There are three types of cash flows:

Capital asset cash flow (CCF)

$\begin{array}{c}\text{CCF}=\text{EBIT}+\text{Depreciation}-\text{Capital Expenditures}-\text{Working Capital Increase}\\ -\text{Actual Taxes}\left(\text{payment of taxes taking into account the tax shield}\right).\end{array}$

$\text{Here Actual Taxes}=\text{Tax Rate}\left(\text{EBIT}-\text{Interest}\right).$

Equity cash flow (ECF)

$\begin{array}{c}\text{ECF}=\text{EBIT}+\text{Depreciation}-\text{Capital Expenditures}-\text{Working Capital Increase}\\ -\text{Interest}-\text{Debt payments}+\text{Debt issues}-\text{Actual Taxes}\end{array}$

Invested capital cash flow (FCF)

$\begin{array}{c}\text{FCF}=\text{EBIT}+\text{Depreciation}-\text{Capital Expenditures}-\text{Working Capital Increase}\\ -\text{Interest}-\text{Debt payments}-\text{Hypothetical Taxes}\left(\text{Tax rate}\times \text{EBIT}\right)\end{array}$

2) a) Collect the following data for the assessment year (2023)

$\text{μ},t,k_d,\text{D},\text{S},\text{L}=\text{D}/\text{S}$.

Here μ is profitability, t is tax on profit, $k_d$ is the cost of debt, D is the value of debt, S is the value of equity and L = D/S is the level of leverage.

b) To find the parameter k₀ from the MM equation for k_e

${\mu }_i={\mu }_0+L\left({\mu }_0-k_d\right)\cdot \left(1-t\right)$ (1)

Find k₀ from the formula (2) below

$k_0={\mu }_0=\frac{{\mu }_i+L{k}_d\cdot \left(1-t\right)}{1+L\cdot \left(1-t\right)}$ (2)

3) Using the BFO formula, we find the WACC(n) dependence (n runs from 1 to the age of the company in 2023)

$\frac{1-{\left(1+\text{WACC}\right)}^{-n}}{\text{WACC}}=\frac{1-{\left(1+k_0\right)}^{-n}}{k_0\cdot \left(1-w_{d}t\left[1-{\left(1+k_d\right)}^{-n}\right]\right)}$ (3)

For a fixed n (1, 2, …) we find WACC (by selecting the parameter (WACC)) and plot the WACC(n) dependence graph using Excel tables.

Alternative method for finding WACC(n)—using programming language Python.

4) To calculate the capitalization of company V, we use the following formula

$\text{V}={\text{CF}}_{23}+{\text{CF}}_{22}\cdot \left(1+{\text{WACC}}_{23}\right)+{\text{CF}}_{21}\cdot \left(1+{\text{WACC}}_{23}\right)\cdot \left(1+{\text{WACC}}_{22}\right)+\cdots$ (4)

5) Compare the company’s capitalization calculated for two (or more) cash flows and the actual value of the company’s market capitalization.

To evaluate the business, it is necessary to continue calculating the dependence of WACC(n) for five to ten years (or maybe more) (so we will consider 5-year and 10-year horizons). At the same time we can consider constant CF, or variable CF. In the first case one should use the following formula for representative (V₁) and terminate (V₂) periods:

For 5-year horizon

$\begin{array}{c}{\text{V}}_1={\text{CF}}_{23}\cdot [{\left(1+{\text{WACC}}_{24}\right)}^{-1}+{\left(1+{\text{WACC}}_{24}\right)}^{-1}{\left(1+{\text{WACC}}_{25}\right)}^{-1}\\ +\cdots +{\left(1+{\text{WACC}}_{24}\right)}^{-1}+\cdots +{\left(1+{\text{WACC}}_{28}\right)}^{-1}]\end{array}$ (5)

${\text{V}}_2=\frac{{\text{CF}}_{23}}{{\text{WACC}}_{28}\left(1+{\text{WACC}}_{24}\right)+\cdots +\left(1+{\text{WACC}}_{28}\right)}$ (6)

$\text{V}={\text{V}}_1+{\text{V}}_2$ (7)

For 10-year horizon

$\begin{array}{c}{\text{V}}_1={\text{CF}}_{23}\cdot [{\left(1+{\text{WACC}}_{24}\right)}^{-1}+{\left(1+{\text{WACC}}_{24}\right)}^{-1}{\left(1+{\text{WACC}}_{25}\right)}^{-1}\\ +\cdots +{\left(1+{\text{WACC}}_{24}\right)}^{-1}+\cdots +{\left(1+{\text{WACC}}_{33}\right)}^{-1}]\end{array}$ (8)

${\text{V}}_2=\frac{{\text{CF}}_{23}}{{\text{WACC}}_{33}\left(1+{\text{WACC}}_{24}\right)+\cdots +\left(1+{\text{WACC}}_{33}\right)}$ (9)

$\text{V}={\text{V}}_1+{\text{V}}_2$ (10)

The terminal period here (in the formulas (6) and (9)) is considered infinite. For a finite terminal period, it is necessary to continue calculating WACC(n) within the framework of the BFO theory.

The company was founded in 1994 as the First Mortgage Company. In the 2000s, several factories producing building materials and components for construction were acquired. In July 2007, the company went public, and its securities began to be traded on the Moscow and London stock exchanges.

To assess the value of a business and a company, one needs to do the following:

1) Collect and process company data (links to websites) for the entire period of the company’s existence or from the moment of its IPO (in increments of one year):

a) CF for each year (two methods):

Let’s calculate CF using the first method (by quotes), using the formula:

$\begin{array}{c}\text{CF}=\text{number of shares at the end}\times \text{share price at the end}\\ -\text{number of shares at the beginning}\times \text{share price at the beginning}\text{.}\end{array}$

We’ll get the following Tables 1-4 and Figure 2 .

For stock quotes— https://ru.investing.com/equities/pik_rts https://www.moex.com/ru/issue.aspx?board=TQBR&code=PIKK

For number of shares https://www.kommersant.ru/quotes/ru000a0jp7j7 https://stockchart.ru/fundamental/MSFO/PIKK/number_of_shares https://marketcap.ru/stocks/PIKK/financial-statements/income-statement/number-of-shares

Let’s calculate CF using the second method, using the formula:

$\begin{array}{c}\text{CCF}=\text{EBIT}+\text{Depreciation}-\text{Capital Expenditures}-\text{Working Capital Increase}\\ -\text{Actual Taxes}\left(\text{payment of taxes taking into account the tax shield}\right).\end{array}$

$\text{Here Actual Taxes}=\text{Tax Rate}\left(\text{EBIT}-\text{Interest}\right)$.

2) Collect the following data for 2023 μ, t, kd, D, S, L = D/S and find the parameter k₀ from the MM equation for k_e

${\text{μ}}_i={\text{μ}}_0+L\left({\text{μ}}_0-k_d\right)\cdot \left(1-t\right)$

Find k₀

$k_0={\text{μ}}_0=\frac{{\text{μ}}_i+L{k}_d\cdot \left(1-t\right)}{1+L\cdot \left(1-t\right)}$

Company value could be calculated by formula (4).

In the first case company value is equal to V = 318,902,000,000 rubles, in the second—V = 345,504,000,000 rubles. Or in billions of US dollars in the first case V = 3.08326 billion US dollars, in the second—V = 3.34046 billion US dollars.

Market value in 2023 V = 4.334 B$ (448.3 B rubles)

It is obvious that the company value calculated by the two methods is quite close, but underestimated in relation to the market value. This may be due to the fact that business risk was not taken into account in the current consideration (see Brusov and Filatova (2025) ).

Using the formulas (5)-(7) one gets the following results for business valuation for 5-year representative period and infinite terminate period (see Table 5 ).

1) According to stock quotes (CF23 = 48,084,206,643 rubles)

Then obtained values (in rubles):

Company valuation in 2028 year will amount to 442,868,000,000 rubles. Or 4.28181 billion US dollars ( Table 6 , Table 7 ).

2) Using formula (СF₂₃ = 84659000000 rubles)

Company valuation in 2028 will be 779,732,000,000 rubles. Or 7.53874 billion US dollars.

For 10 years:

Let us provide business valuation for 10-year representative period and infinite terminate period (by two methods) ( Table 8 ).

3) According to stock quotes (CF23 = 48,084,206,643 rubles)

Results for business valuation for 10-year representative period and infinite terminate period. (in rubles) is shown in Table 9 .

Company valuation in 2033 will be 442,396,000,000 rubles. Or 4.27725 billion US dollars ( Table 10 ).

4) Using formula (CF23 = 84,659,000,000 rubles)

Company valuation in 2033 will be 778,900,000,000 rubles. Or 7.5307 billion US dollars.

Business valuation for 10-year representative period and infinite terminate period (by two methods) are shown in Table 11 .

To evaluate a business for a 5-year and 10-year representative period and an infinite terminal period (using two methods) within the framework of the Brusov-Filatova method ( Brusov & Filatova, 2025 ) it is necessary to use the following formulas:

For 5-year horizon

${\text{V}}_1=\frac{{\text{CF}}_{23}}{\text{WACC}\left(23\right)}\cdot \left(1-{\left(1+\text{WACC}\left(23\right)\right)}^{-\left(5\right)}\right)$ (11)

${\text{V}}_2=\frac{{\text{CF}}_{\text{23}}}{\text{WACC}\left(\text{28}\right)}$ (12)

$\text{V}={\text{V}}_1+\frac{{\text{V}}_{\text{2}}}{{\left(\text{1}+\text{WACC}\right)}^{\text{5}}}$ (13)

For 5-year horizon

${\text{V}}_1=\frac{{\text{CF}}_{\text{23}}}{\text{WACC}\left(\text{23}\right)}\cdot \left(1-{\left(1+\text{WACC}\left(23\right)\right)}^{-10}\right)$ (14)

${\text{V}}_2=\frac{{\text{CF}}_{\text{23}}}{\text{WACC}\left(\text{33}\right)}$ (15)

$\text{V}={\text{V}}_1+\frac{{\text{V}}_{\text{2}}}{{\left(1+\text{WACC}\right)}^{10}}$ (16)

Formulas (11)-(16) used in the Brusov-Filatova (BF) approach ( Brusov & Filatova, 2025 ) differ from formulas (5)-(10) used here, since in this case we use more detailed information about the financial flows CF and the discount rate WACC(n).

Below, in Table 12 , we compare the current results with the results, obtained within the framework of the Brusov-Filatova (2025) approach regarding the valuation of the PIKK company’s business.

Comparison of the present more detailed method with the method developed by us earlier shows that 1) when assessing a business, both methods give very close results. Thus, for assessing a business, the use of the less detailed previous method is justified. This is also important from the point of view that the first method requires much less information and time for its processing. Thus, the proposed approach is more accurate, than BF one since it more accurately takes into account both main business valuation parameters: CF and WACC.

2) But when assessing capitalization, the new method gives a more adequate result, practically close to the market capitalization of the company, while the result of the previous method ( Brusov & Filatova, 2025 ) gives an excess of the market capitalization of the company (sometimes several times).

The difference in the results of the two approaches is due to the following facts. 1) CF is a constant value in the BF approach and a variable value in the current approach (in one-year increments); 2) WACC is a constant value in the BF approach ( Brusov & Filatova, 2025 ) and a variable value in the current approach (in one-year increments). From the analysis of the WACC(n) dependence, which is a decreasing function of n, it follows that the BF approach uses a much smaller WACC value (for the valuation year), and this leads to an overestimation of the company value due to the formula.

But when valuing a business, both approaches use approximately the same WACC values (with a small difference), and this leads to approximately similar business valuation results.

However, for a more accurate assessment of a business and a company, as shown in Brusov-Filatova (2025), it is necessary to take into account business risk along with financial risk, using CAPM 2.0 approach, developed by Brusov et al. (2024d) .

1) Yandex capitalization in 2023

In the first case, with CF calculated using the stock price, capitalization V = $4.98 billion.

In the second case, with CF calculated using the formula, capitalization was V = $4.18 billion.

The actual market capitalization, according to various sources, is $9.13 billion (918.9 billion rubles).

2) Company valuation

CF by formula (EBIT):

Company valuation for 5 years (until 2028): $4.11 billion

Company valuation for 10 years (until 2033): $4.06 billion

CF by stock quotes:

Company valuation for 5 years (until 2028): $4.84 billion

Company valuation for 10 years (until 2033): $4.73 billion

It is obvious that Yandex’s capitalization results are understated relative to the market. This may be due to the fact that the current consideration does not take into account business risk.