The purpose of this thesis was to determine the company value using free cash flow model and value added model. The reason for the study was a possible sale of the company. The company is a small electrical installation company with 30 years’ operation in the field.

The groundwork for this study was conducted as qualitative research using material provided by the company in form of financial statements and other documents, literature, online sources and interviewing the entrepreneur of the company. The financial statements used were from accounting periods 2/2011–2/2016.

The company valuation process was divided into three sections: current state of the company, forecasts about the state of the company and finally, valuation. The current state of the company was determined by strategic analysis and financial statement analysis. The strategic analysis included factors inside and outside the company and the financial statement analysis reviewed the historical performance of the company in form of ratio analysis and time series analysis. The specific factors in company value were brought under closer examination by comparing the ratios to industry equivalent in time series analysis. The predictions for the future state were prepared by evaluating the risk involved with the equity, the debt and the total cost of capital. Different factors concerning the cost of capital were analyzed in sensitivity analysis. Company factors by free cash flow model based on free cash flow statement and value added model used equity as basic information. As a result, correlation between changes in the sales and assets, and risk were found. In addition to the current value models, the value of the company was determined with balance sheet information as a net asset value based on book value and market value.

The company value varied depending on the method of calculation. The results with free cash flow model were 172 591€, value-added model 103 019€, net asset value by book value 58 514€ and net asset value by market prices 53 366€. The average in current value models were 109 659€. Based on the information from the strategic analysis and knowledge of current state of the economy in the area where the company operates, the price is more likely to set between the net asset value (market price) and the average of the current value models. The reliability and validity of this study were enhanced by using recommendations of Yritystutkimus ry in ratio calculation and prudence in forecasts of future sales and actions made by the company.