Valuation models are tools used to estimate the worth of an asset, such as a company or real estate. These models help investors and analysts determine whether an asset is overvalued or undervalued based on various financial metrics and assumptions. Common types of valuation models include the Discounted Cash Flow (DCF) model, which projects future cash flows and discounts them to present value, and the Comparable Company Analysis, which compares similar companies to derive a value. These models rely on different inputs and methodologies, making them suitable for various situations. For instance, the Asset-Based Valuation focuses on the value of a company's assets, while the Market Capitalization approach looks at the total market value of a company's outstanding shares. Understanding these models is essential for making informed investment decisions.