How to calculate the value of the enterprise
Video: Calculating the Enterprise Value of a Firm 2024, July
If you decide to increase the value of your enterprise, which is the goal of every businessman, for a start it would be nice to determine this very value. The most famous business valuation approaches are comparative, profitable and costly.
You will need
Financial statements, market data.
Instruction manual
1
If there is a well-formed market, then you can evaluate the value of the company by how much it can be sold. Try to find in the market the fact of the sale of an enterprise similar to yours. The fixed selling price will be the approximate value of your business. The main advantage of this approach is its focus on actual market-adjusted purchase prices.
2
Is the revenue approach one of the most important? the ability of a business to make a profit. Using this approach, you can determine the market value of the company, taking into account the expected future income. To determine the profit for a specific period of time, it is necessary to analyze retrospective data and make a forecast, taking into account all the risks that may violate the company's plans to receive the expected income.
3
The property or cost approach will allow you to assess the value of the business in terms of costs incurred by the founders. In accordance with this approach, the value of an asset is determined by the sum of costs that must be incurred in order to replace or reproduce it (an asset). The advantage of the costly approach is its reliability, since only the actual value of the company's property is taken into account. To assess the company, analyze all the articles of its balance sheet, summarize the value of assets, and then subtract the balance sheet liability (current and long-term debt).
4
A comparative approach sometimes does not adequately assess the value of the company, since the market quite often reflects speculative sentiment, which forces us to analyze stock prices over a long period (3-5 years). The income approach is not able to take into account all possible risks, and the cost approach does not take into account development prospects. Therefore, when evaluating a business, it is best to combine them - in this case, it will be possible to most accurately assess the value of the company.
