Instructor:
Instructor David E. Coffman CPA/ABV/CFF, CVA Accredited & Certified in Business Valuation – ABV & CVA Has Valued Hundreds of Small Businesses President & CEO of:
Business Valuations & Strategies PC, Harrisburg, PA
Business Advisors Group PC, Seaside Park , NJ Email: dave@bus-val-strat.com
Part 3 - Quantifying Business Returns:
Part 3Quantifying Business Returns
Basic Concept of Business Value:
Basic Concept of Business Value Business Value = Returns ÷ Risks
Returns quantified using
Sales
Earnings
Risks quantified using
Multiples
Rates
Benefits of Ownership:
Benefits of Ownership Non-financial
Difficult to quantify
Financial
Focus of valuation
Earning capacity
Earning Capacity:
Earning Capacity No earning capacity
Value from tangible assets
Components
Cash flow is preferred measure
After deducting adequate owner compensation
Historical trend
Past vs. Future Performance:
Past vs. Future Performance Future
Fits valuation theory better
Not practical
Less reliable
Past
More reliable
Can be adjusted
Easier to justify
Conclusion:
Conclusion Expected future returns
Key component of business value
Quantified based on earning capacity NEXT – Part 4: Quantifying Business Risks For More Information About:
Doing Your Own Business Valuation – http://do-your-own-valuation.com
Getting a Low-Cost Business Valuation – http://low-cost-bv.com