An asset's value is determined by its intrinsic value. This is a metrics which is used to to determine the real value of a company by using an intricate financial model or an objective computation. The intrinsic value of an asset is distinct from its present market value. Investors can determine if an asset is overpriced or undervalued by comparing it to its current price.

To find a intrinsic value of a company cash flow is put in use in financial analysys toascertainacompany'sorstock'sintrinsic,orunderlying,worth.Thedifferencebetweentheoption'sstrikepriceandtheunderlyingasset'scurrentmarketpriceisknownastheintrinsicvalueinthepricingofoptions.A market risk element is also estimated in many valuation models. For stocks, the risk is measured bybetaan estimation of how much the stock price could fluctuate or its volatility.

Intrinsic value can be increased by the following ways:

Being profitable on paper is not nearly as tempting as being profitable with cash on hand because cash is still king. Without paying attention to margins and free cash flow, it is impossible to optimize the value of your business. Free cash flow is desired by buyers because it enables corporate expansion. But avoid the error of confusing free cash flow with revenues. Millions in income might be offset by millions in costs, leaving you with little free cash flow. For a buyer, cash signifies steadiness, which is quite important. Buyers seek for businesses with efficient operations because doing so enables a company to establish and sustain a competitive edge. Systems development allows for the early detection, identification, and resolution of operational issues. The value of the business is raised by these efficiencies. According to my observations, an effective systemized operations plan results in less time spent putting out fires and more time spent enhancing the company and its value. A buyer is reassured that the company is well-positioned to sustain and grow earnings and value by being given a proven operations strategy.

Both the latest 12-month financial statements and the previous three years' worth of financial data are often inspected by buyers. More useful than displaying abrupt profit surges mixed with flat or negative earnings is demonstrating steady and consistent growth. The value of a firm decreases since it is hard to predict its future due to feast-and-famine revenue. Even if it takes a bit longer, consistent development will often be more useful. A firm will be worth more to a potential buyer if it is less reliant on the owner. While it is typical for an owner to be completely dependent on their firm during the early stages of development, they should hand up control of day-to-day operations as soon as possible to well-established procedures and a capable management team. But take carepotential purchasers will also consider it dangerous to rely so heavily on a single important employee. The same is true if a large amount of your revenue is derived from a small number of clients or if you depend heavily on important suppliers who are difficult to replace. While operating under a handshake is ideal in theory, it is crucial to have written contracts with all of your clients, suppliers, and essential personnel. By contractually guaranteeing partnerships, it is possible to safeguard the company's operations, revenue, and supply chain, which provides stability and value.

Question: After reading the opinion above, what is your response? What may be some risks or drawbacks? Please be detailed in your opinion.