Business Valuation Calculator and Using the Formula

The business valuation calculator is a highly practical tool you can use to know and determine the value of your business. Just like real estate or bond valuations, the value of your business can be expressed as a present value of the expected future earnings. Using the calculator is now getting easy and easier to do as there are many websites providing the similar tool you can use… even for free. All you need to do is most likely only to input figures necessary for each column, such as annual earnings before taxes, interest, amortization, and depreciation and discount for lack of marketability.

Business Valuation Calculator and Using the Formula

Business Valuation Calculator

The information provided by the business valuation calculator may help analyze your financial needs. The result is based on assumptions and information made available by you regarding your financial situation, expectations, and goals. The calculations do not conclude that your company assumes any fiduciary duties. Apart from that, the calculations made available shouldn’t be construed as legal, tax, or financial advice. In fact, such information shouldn’t be relied upon as the one and only source of information. Many tools provide information that is supplied from sources believed to be reliable, yet they cannot guarantee the accuracy, though. Remember that the hypothetical illustrations may supply current or historical performance information while past performance doesn’t always indicate, not guarantee, future results.

The business valuation calculator usually uses the following categories of business valuation methods when making the calculation, depending in the major focus: (1) Business assets, which include liquidation value and book value methods; (2) Historical earnings, including capitalization of cash flow or earnings, debt-paying ability, dividend-paying ability, and gross income multipliers methods; (3) Assets and earnings valuation; (4) Market for similar businesses, including P/E ratio methods, industry rule of thumb, and comparable sales; and (5) Discounted future earnings or cash flow methods.

In the end, the business valuation calculator can help you—but it’s not making it as the only way—to examine the historical financial statements of your company and carefully think about the prospects for future growth. It is always recommended to hire an expert business appraiser to assess your business, though, considering how valuing a business can turn to be a time consuming and very complex work. It requires sufficient amount of experience to generate the reliable and trusted information you and your business can use to evaluate your business condition financially and how to portray the growth in the future.

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