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Why Do APV Factors Default to Zero?

Adjusting APV factors, APV is 0 or zero, Bankruptcy Cost, Probability of Bankruptcy, Free Cashflow, Adjusted Present Value

Updated over 2 weeks ago

In earlier versions of Valutico, the Probability of Bankruptcy and Bankruptcy Costs were pre-filled using industry-specific averages.

While this aimed to streamline the process, it often led to inconsistent or overly volatile APV (Adjusted Present Value) results, especially in sectors with wide variability in risk assumptions.

Updated Approach: Zero by Default

To give users greater control and consistency, these APV inputs now default to 0%. This ensures the base valuation starts from a neutral position and avoids unintentionally skewed results.

How to Adjust These Inputs

If you want to apply custom values based on your assumptions or industry research:

  • Navigate to the Valuation module

  • Click “Change Parameters” (top-right corner)

  • Scroll to the APV section and enter your preferred values for:

    • Probability of Bankruptcy

    • Bankruptcy Cost

Tip: If you're unsure what inputs to use, consult historical distress case studies or industry research to ground your assumptions in real-world data.

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