Ohlson Model

The Ohlson Model is a method used to estimate a company's current value by combining its book value (the net worth recorded on financial statements) with expected future profits. It considers how the company's assets and earnings will grow or decline and adjusts for risks and market expectations. Essentially, it provides a way to determine a company's worth based on tangible assets and the potential for earning future profits, helping investors and analysts make more informed valuation decisions.