Small business valuation formulas are the tools used by business valuers to benchmark businesses against their peer groups.
Some of the most commonly used small business valuation formula terms to describe the business’s profits and the price the business sells for are:
EBITDA– earnings before interest tax depreciation and amortisation
EBIT– earnings before interest and tax
NPAT– net profit after tax
PEBITDA– proprietors earnings before interest tax depreciation and amortisation
ROI– return on funds invested
ROFI -also return on funds invested.
Small business valuation formulas are all about the relationship between the profit a business can maintain and the resulting value that profit gives the business in the marketplace.
Knowing the appropriate small business valuation formula to apply for each particular business is critical as inappropriate use of the wrong small business valuation formula can result in an inaccurate valuation of the business.
Rent roll valuations are one of the most common valuations done by Business Valuer Network members. We value many real estate practices each year and have a broad database of