With our business value calculator you will be able to get an appraisal for your business based on your assets and liabilities.
Calculating the value of your business is essential to not only understanding its status and health but a valuable tool in case of needing to sell it. There are many ways to calculate the value of your business. We have chosen the valuation based on the book value method. Make sure you have all the information needed alongside this with our other Business Calculators.
Evaluating the appraisal of your business is different from its net income. Although revenue is a factor, a better indicator for evaluating its present health is calculating the Net Income calculator.
How do you calculate the value of your business?
Choosing a way to obtain the value of your business is an important first step. If your company is publicly traded, often what is done is simply the multiplication of your share value by the number of shares, which will give you a valuation. Also used are earnings multipliers to calculate its future value. Because we are interested in a valuation that is applicable in most business contexts, let us take a more versatile measure.
We use the Book Value method which is a method that calculates the present value of your business without immediate stock price shares being too important a factor. It is more reliable as a present valuation than the immediate share price, but also not as speculative as the other main indicators, that evaluate it based on future earnings.
What is the Book Value Formula?
Book Value borrows from the principles of bookkeeping. In bookkeeping theory, every organisation has assets and liabilities. An asset is a resource with economic value that your company owns or is owed. A liability is something that you will have to pay for or owe to an individual (depreciation, debt). Assets and liabilities can be current or non-current. Current refers to assets or liabilities that can be settled in one year. Non-current are ones settled on a longer term basis.
Book Value = (Current Assets + Non-Current Assets) – (Current Liabilities + Non-Current Liabilities)
How does the Business Value Calculator Work?
Simply choose your currency and plug in all your assets and their valuation where applicable :
- Cash and cash equivalents
- Inventory (PCs, equipment)
- Property, Plant and Other Equipment)
- Patents : the patent on your product if applicable protect your company from copying
- Accounts Receivable : what is owed to you by people who have purchased your product or service but whose actual cash has not landed into your hands yet.
- Other Assets
and then all your liabilities :
- Accounts payable : what your business still needs to pay in cash for commitments you made to purchase a certain product or service
- Interest payable : the amount on interest you are paying when repaying debt.
- Unearned revenue
- Other liabilities
How can I sell my company?
With the valuation in mind, you must evaluate based on the size of your company and whether or not it is publicly traded how to sell your company. Negotiations may be based on other measures of company valuation and factors such as the urgency of the seller, negotiation skills and . If your company is publicly traded usually the share price multiplied by the amount of shares you own is used as an indicator.