Viewing the Purchase of Dental Practices in Australia through a Finance LensNarayana T1 and Ramiah V2*
- *Corresponding Author:
- Vikash Ramiah
Associate Professor of Applied Finance
UniSA Business School
37-43 North Terrace
City West, Adelaide
South Australia 5000, Australia
E-mail: [email protected]
Received date: April 16, 2017; Accepyed date: May 08, 2017; Published date: May 18, 2017
Citation: Narayana T, Ramiah V (2017) Viewing the Purchase of Dental Practices in Australia through a Finance Lens. J Bus Fin Aff 6: 265. doi: 10.4172/2167- 0234.1000265
Copyright: © 2017 Narayana T, et al. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Most private dentists are faced with the decision to purchase a dental practice at some point in their career, and are usually ill equipped to undertake the necessary capital budgeting decisions, including the valuing of the practice. Valuations of dental practices are usually done according to industry rules of thumb by the dentists themselves or according to accounting principles by accountants who often have little knowledge of the industry. These traditional techniques tend to value practices as a sum of their tangible and intangible assets, rather than in terms of what a prospective buyer is interested in: the potential to generate an income stream. Finance principles can be used to value a practice according to its cash flow potential and to help decide whether the investment in a particular practice should be undertaken. This paper proposes the use of net present value analysis to calculate the value of a dental practice using recent developed asset pricing models, and to evaluate its potential as a future investment, and also examines trends in the Australian market through a finance perspective.