Value of the company

[biztreesg]

Dear guys,

How can we justify the company value ? ( is that worth to buy )

Thanks

[Walking At Nights]

Just my thoughts, there are 3 possible ways:

1. Market based price. This is a price determined for your target business based on the prices of similar businesses, of the same product or services, size, balance sheet, and location, sold in the immediate past, say in the last 1 year.

2. Profitability. This is based on the discounting of the future cash flow projections you believe you can achieve from the target business, taking into account planned changes and expenditure, market competition and demand, etc.

3. Net Realisable Value. This is based on the net asset of the business at year, i.e. the assets of the business minus all their liabilities at year-end. However, remember that you may need to adjust the balance sheet, prior to determining the net asset of the business, to account for commitments not capitalized as a liability in the balance sheet and assets that are no longer recoverable, such trade receivables not collectible or equipments not longer useable.

[Mad Scientist]

You forgot a few more

1. If it is a profitable company, look at the full set of account, stock, debt, credit etc..

2. If it is yes, how much goodwill do you need to fork out?

3. If it is a going concern, then the tides is shifted against them

[nutnut]

More robot posting.... Can we get Captcha on the registration? Or do we already have one?

[AnthonyC]

I think another major adjustment that has to be done on the books before a valuation can be given is removing personal expenses that were claimed as company expenses in different periods. This will give you a better estimation of the company's true expenses it incurs in order to fulfill its work.

Also, many entrepreneurs tend to 'under' pay themselves in the business, and play a crucial role in delivering value to customers. So replacing them may cost more. In fact i've seen times when they have had to be replaced by several persons.